Key Energy Services has closed on the sale of its frac stack and well testing assets to Covenant Testing Technologies, a provider of flowback and well testing services in North America, for total consideration of $23.7 million. Covenant is an affiliate of Catapult Energy Services Group, an oilfield services portfolio company funded by NGP and NGP Energy Technology Partners. Proceeds from the transaction will be used for general corporate purposes.

The assets contributed approximately 16% of Fishing & Rental Services segment revenue in Q1/17. The transaction will result in an approximately $17.0 million gain on sale of the assets. Key does not expect to pay any cash taxes associated with this gain.

Key’s President and CEO, Robert Drummond, stated, “This divestiture represents another milestone in Key’s continued effort to dispose of non-core assets to position the company as a leading production services provider in the U.S. We appreciate John and the Covenant team’s commitment to closing this transaction and wish the Covenant team continued success moving forward.”

Covenant’s CEO, John Cavitt, commented, “Covenant is excited to announce the addition to our existing fleet of flowback and well testing equipment. These assets will service the growing demand of our customers in the Permian Basin and will position Covenant as one of the largest pure play well flow management businesses in the U.S.  We are honored to have Key as an equity partner and are grateful for a smooth, accretive transaction for both parties.”

Key Energy Services is an onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental U.S. and internationally in Russia.