LAYTON CORPORATION PRESS

Daniel Layton has long believed in the shale phenomenon, which has reinvigorated the U.S. onshore oil and gas industry. Now he’s backing up that belief by pumping money directly into the sector’s power source.

Layton, president of Houston’s Layton Corp., an energy-based private equity firm, has compiled $115 million to finance a hydraulic fracturing startup, U.S. Well Services.

The new Houston-based company will provide drilling services and equipment for shale oil and gas operators in the northeastern U.S. The company will be led by fracking pioneer, Donald Stevenson, formerly of Stewart & Stevenson LLC.

The pair will spend the next two to three months ramping up hiring. Layton expects to hire about 100 people, spread among the corporate headquarters in Houston and two shale plays, the sprawling Marcellus and the Utica in New York. The company should be fully active within six months, he said.

Layton forecasts revenue of $200 million in the first 12 months, once the company is up and running.

When Layton signed on to finance the startup, he set a couple of conditions. Namely, he wanted to select the CEO and CFO.

“They had some folks who were proficient technically, but the first person I thought of to lead was Donnie Stevenson,” Layton said. The CFO has yet to be named.

Stevenson, who retired in 2004, has worked in the industry for decades. After earning a bachelor’s degree in electrical engineering in 1967, he went to work at the company his grandfather founded in Houston in 1902, Stewart & Stevenson.

The company designed remote control devices and monitoring equipment for the high-pressure, engine-driven pumping units his grandfather first developed. Until that point, many of those engines ran on hydraulic or pneumatic power.

“We developed all of them to be electronically remote-controlled, and that has evolved into using computers,” Stevenson said.Layton said he planned to buy hydraulic fracturing equipment from Stewart & Stevenson, and then it occurred to him that the founder’s grandson would be a perfect fit as CEO of U.S. Well Services.

Layton was already active in shale plays as a board member of Platinum Energy Solutions Inc. — which focuses on the Eagle Ford shale in South Texas — when the Marcellus grabbed his attention as an equally viable location. Separately, Platinum Energy this week filed for an initial public offering worth $300 million (read more at http://bizj.us/b3scr).

“We’re going to have our hands full in the Marcellus,” Layton said. “We want to focus on one area and do it well.”

Layton and Stevenson have high hopes for the operation, especially given that they will be operating with state-of-the-art equipment.

Many of the machines in use today have decades’ worth of wear and are in need of repair — as much as 20 percent of the high-pressure pumping en

gines on the market, Stevenson noted. Nationwide, 3,250 wells are waiting for completion, based on a lack of available equipment.

New equipment can take five to six months to produce, from the time it’s ordered to its delivery date. One fleet consists of about 30 pieces of equipment and costs roughly $51 million, Stevenson said.

Houston energy attorney Rick Burleson, managing partner of Burleson LLP, said even with large, successful companies such as Halliburton Co. , Schlumberger Ltd. and Baker Hughes Inc. serving operations in the Marcellus, there is a lot of demand for fracking crews in the play.

“I think somebody who can go and provide quality services to the producers is going to have a good chance of success,” he said. “(With Stevenson) you’ve got a name and reputation and history of doing good work, and I think that’s what people who invest millions of dollars in wells are going to be looking for.”

U.S. Well Services.

HQ: Houston

INITIAL INVESTMENT: $115 million

PROJECTED REVENUE: $200 million, first year of operation

FOUNDED: 2011

CEO: Donald Stevenson

INDUSTRY: Energy drilling services (hydraulic fracturing)