(By Balaseshan) Caterpillar Inc. (NYSE: CAT) said the company and Ariel Corp. have created a 50-50 joint venture that will provide well service pressure pumping products for customers in the global oil and gas industry.
The combined venture, Black Horse LLC, also announced the acquisition of pump manufacturer ProSource of Houston, Texas. The acquisition of ProSource, which designs and manufactures reciprocating pressure pumps, enables Black Horse LLC to serve the well service market.
Black Horse LLC will leverage Caterpillar and Ariel engineering and manufacturing expertise to expand ProSource's existing product line to better serve global oil and gas customers. Frac pumps sold through the combined venture will be branded and sold under the Cat name and distributed through the Cat dealer network.
[Related -Planning a Range Fade or Breakout Trade for Caterpillar CAT]
Under the arrangement, executives from Caterpillar's Marine and Petroleum Power Division and Ariel Corporation will jointly lead Black Horse LLC, which is headquartered in Houston, Texas.
The joint venture and integration of ProSource will result in important synergies, including leveraging the companies' existing product ranges, advanced technologies, research and development resources, and manufacturing, distribution and customer support capabilities.
Caterpillar is a manufacturer of diesel and natural gas engines for the generation, control and supply of mechanical and electric power for the marine and petroleum industries. Ariel is involved in the design and manufacture of gas compressors.
[Related -The Best Of Three Tech Shorts]
More than 40,000 Ariel compressors are currently in use throughout the global energy industry to extract, process, transport, store and distribute natural gas from the wellhead to the end-user.
CAT is trading up 2.34% at $86.13 on Wednesday. The stock has been trading between $78.25 and $116.95 for the past 52 weeks.