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Energy companies return to IPO market


Written by Adam Wilmoth

Click HERE to Read the Article by the Publisher.

After a two-year drought, energy companies are returning to Wall Street in another sign that the downturn may be ending.

Oklahoma City-based Mammoth Energy Services Inc. last month completed a $116 million initial public offering, marking the country’s first oil-field services IPO since August 2014.

Mammoth’s IPO followed less than a week after Denver-based Extraction Oil & Gas Inc. raised almost $633 million in the first IPO for a U.S. oil and gas explorer in more than two years.

The Woodlands, Texas-based Smart Sand Inc. this week raised $129 million in an IPO. The company produces Northern White raw frack sand, which is used in hydraulic fracturing operations to help boost oil and natural gas production.

Dallas-based oil and natural gas producer Energy Hunter Resources on Oct. 25 announced plans for an IPO.

Low oil and natural gas prices over the past two years have eroded profits at companies throughout the oil patch. Oil field service companies like Mammoth have been among the hardest hit as producers dramatically have scaled back operations.

Higher commodity prices and more efficient operations over the past few months, however, have led to a growing interest in oil field activity, especially in central Oklahoma’s STACK and SCOOP fields.

The new IPO activity also is a sign that Wall Street again is interested in investing in oil and natural gas companies.

Mammoth Energy CEO Arty Straehla said the company used the proceeds from the IPO to pay off the company’s debt and to give it the ability to expand as industry activity picks up. Mammoth had almost $175 million in liquidity as of Nov. 7, Straehla said.

“We’re now poised and ready to selectively expand the Mammoth portfolio,” he said Wednesday during a conference call with analysts. “We’re well positioned in the key areas of development in North America and envision broadening out our exposure by adding capacity and by filling in additional services that make sense to us.”

The company already has agreed to buy 75,000 hydraulic horsepower in new equipment it expects to receive in the middle of 2017.

“We expect that this capacity expansion will fuel additional growth in the second half of 2017 and all of 2018, and will be funded from cash on hand and cash flow,” Straehla said.

The number of rigs drilling oil and natural gas wells throughout the country has increased to 569. The count is 165 from its more than 60-year low in February, but still off 71 percent from 1,929 in November 2014.

“While the recovery in rigs is one metric of activity, we are keenly focused on wells completed and completion design in addition to rig efficiency, all of which has continued to increase throughout this downturn,” Straehla said Wednesday. “The technological improvements to this industry have been truly remarkable.”

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Written by Adam Wilmoth

Click HERE to Read the Article by the Publisher.