US Oilfield Service Firms Gearing Up for Flotation

Energy executives say they would increase drilling sharply at prices above $60 a barrel.
Energy executives say they would increase drilling sharply at prices above $60 a barrel.

US oilfield service companies are gearing up for initial public offerings, according to regulatory filings and analysts, after several shelved equity sales last year during a weak period for oil prices. Oil is trading near its highest level since early 2015, fueling demand for service firms to bring new shale wells to production. Energy executives surveyed last month said they would increase drilling sharply at prices above $60 a barrel. Crude recently traded at about $61.5 a barrel, Reuters reported.

Investors’ appetite for the shares will be tested soon. Liberty Oilfield Services, which provides hydraulic fracturing services to shale producers, last week filed to raise about $160 million by selling 10.7 million shares at about $15 a share.

If its flotation performs well, it could open the gates for several other companies aiming to raise funds for new expansion or to buy rivals. Since August, the Van Eck Vectors Oil Services ETF is up nearly 28%, behind the 32% gain in the SPDR S&P Oil and Gas Exploration and Production ETF. Denver, Colorado-based Liberty was one of four oilfield firms that shelved IPOs last year after producers trimmed spending budgets as crude dipped to $45 a barrel. Liberty did not respond to requests for comment. Other service firms also have updated their filings, signaling they may try again.

“We could see a quick ramp up (in IPOs) because there are so many in a good position to go quickly once market conditions improve,” said A.J. Ericksen, a partner with law firm Baker Botts who focuses on mergers and acquisitions and capital markets. His firm represents the underwriters in Liberty’s public offering. Underpinning the improving market for fracking services, there are some 7,300 drilled-but-incomplete wells across the United States as of November, the US Energy Information Administration recently reported. These are wells that have yet to be hydraulically fractured.

BJ Services, FTS International and Nine Energy Service, all of which offer hydraulic fracturing of shale wells, last year filed registration statements with the US Securities and Exchange Commission but did not proceed. Fracking involves pumping sand and liquids at high pressure into a well to release trapped oil and gas.

In late October, FTS amended its registration filing and said its average pricing was up by more than 50% since late 2016. It also said it expects to reactivate six pressure-pumping fleets through mid-2018, suggesting strong demand for hydraulic fracturing.


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