• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 9 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 8 days Does Toyota Know Something That We Don’t?
  • 2 days America should go after China but it should be done in a wise way.
  • 8 days World could get rid of Putin and Russia but nobody is bold enough
  • 10 days China is using Chinese Names of Cities on their Border with Russia.
  • 11 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 11 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 11 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 10 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 10 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 2 days How Far Have We Really Gotten With Alternative Energy
  • 11 days Putin and Xi Bet on the Global South
  • 11 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Expect A New Wave Of Oilfield Service IPOs In 2018

This time last year, the oilfield service sector started showing the first signs of hope and optimism after the OPEC/Russia deal to cut crude oil production by 1.8 million bpd lifted prices to levels last seen years earlier.

In the first five months of 2017, five oilfield services providers filed for an initial public offering, overtaking exploration and production listings by a wide margin, signaling returning optimism in the sector thanks to improved oil prices. The value of the five listings was also impressive: at $1.36 billion it surpassed the total raised through listings in 2013, when oil was trading at almost $100 a barrel. And yet some of the listings flopped, with the companies trading much lower than their issue price.

Now prices are even higher than they were at the beginning of 2017. There is much stronger demand for fracking and maintenance services, and two companies that last year postponed plans for an IPO are now preparing to try again. One other fracking services provider, Liberty Oilfield Services, took the plunge and early this month announced the terms of its IPO, planning to offer 10.7 million shares and eyeing proceeds of up to $161 million.

The other two still standing on the springboard are FTS International and Nine Energy Service. Reuters notes in a recent story that late last year, both FTS and Nine Energy amended the terms of their initial filings, leading analysts to suggest that they may be preparing to give listing another try despite last year’s lukewarm interest from investors that led Nine Energy and another IPO hopeful, BJ Services, to shelve their listing plans. At the time, last May, BJ Services eyed proceeds of $300 million and Nine Energy planned to pocket $100 million from its IPO. Related: Goldman: OPEC Will Talk Oil Prices Down If Brent Tops $70

At the time, the problem seemed to be that that investors were uncertain about returns. As one oil analyst told Bloomberg’s Alex Barinka in May 2017, oilfield services is a very general term that includes a wide variety of different things, from fracking to sand and water supply. It’s difficult to navigate the complex landscape, so investors are staying with the big names, which just became bigger after GE’s takeover of Baker Hughes. According to Rob Thummel, the newcomers on the capital market would need to convince potential investors that there is something that distinguishes them from the herd.

EIA’s latest Short-Term Energy Outlook could help with investor sentiment: The authority has forecast that U.S. crude oil production will hit its highest average daily in history this year, at 10.3 million barrels, and it only continue to grow from there, eventually reaching 11 million bpd in late 2019. This will need a lot of wells drilled and fracked, and that’s where the independents could come in.

The only risk is, of course, the oil price. For now, the going is good with Brent almost touching $70 a barrel and WTI firmly climbing towards $65 a barrel, so drillers can afford the now much more expensive services of Nine Energy, BJ Services, and their likes. But how long will the good going keep?

Saudi Arabia and Russia are no doubt watching U.S. shale developments like hawks, biding their time to pick the best moment to exit the production cut deal. Certainly, neither of them would be particularly happy when prices fall—which they will—but they might decide to risk this instead of having the U.S. produce 11 million barrels daily without doing something about it such as, you know, turning their own taps on full-blast.

By Irina Slav for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News