Kern County oil producer Berry Corp. has prevailed in its bid to purchase a locally active oilfield services company whose addition nearly quadruples Berry's payroll and positions it to compete for state contracts for properly plugging orphan and idle wells.
C&J Well Services had been owned by Fort Worth-based Basic Energy Services Inc., which last year paid about $94 million for its California operations. Dallas-based Berry bought it out of Basic's bankruptcy case, effective Oct. 1, for about $43 million.
Already under Berry's control, C&J will formally become a subsidiary of the oil producer by Nov. 1, and its 910 employees — 97 percent of its payroll under Basic — will join Berry's 347 employees engaged in oil exploration and production.
C&J, which hopes to continue serving and even grow its existing customer base, does plugging and abandonment work, drilling, well servicing and maintenance, tool rentals, production and fluid logistics. It has won the Association of Energy Service Companies trade group's top safety award for 18 of the last 20 years.
"We just plan on continuing to grow our safety culture," said Jack Renshaw, who will continue to lead the nearly 80-year-old service company now known as C&J Well Services LLC.
Berry's president, CEO and chairman, A.T. “Trem” Smith, said C&J is profitable and that its earnings will be accretive to Berry's. He emphasized there are no plans for the new parent company to displace any of C&J's existing customers.
Smith said C&J will help Berry work toward its strategy of aligning itself with California's climate goals, largely by plugging and abandoning orphan and idle wells, which are big sources of carbon dioxide and methane, a particularly potent greenhouse gas.
Until now Berry has had to contract with outside service companies to abandon its own wells.
"Now we have an in-house capability to do the same thing," he said.
"More importantly," he added, "we're able to have C&J Well Services work with the government to develop the market."
Estimating California's need for plugging and abandoning of orphan and idle wells at $6 billion, Smith said other companies will likely be interested in capturing some of that market. "We just know C&J is exceptionally good at this activity," he said.
After Basic voluntarily filed for Chapter 11 bankruptcy protection in August, Berry was designated the lead bidder for C&J. By Oct. 1, no other company had come forward with a superior offer for the oilfield services company.
Renshaw, noting Basic is now in the process of liquidating, said, "Myself and the team are very proud to be part of Berry."