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UPDATE 1-Frack firm FTS sees no IPO in foreseeable future
June 15, 2012 / 6:30 PM / 5 years ago

UPDATE 1-Frack firm FTS sees no IPO in foreseeable future

By Braden Reddall

June 15 (Reuters) - U.S. oilfield services company FTS International has once again put off plans for what had been a highly anticipated initial public offering of shares, at least for the “foreseeable future.”

The company formerly known as Frac Tech said on Friday it no longer expected an IPO any time soon, citing the state of the market. In a sign of how fast the fortunes of the fracking industry changed, this comes only six months after FTS was drawing investment interest from Chinese oil majors.

Apart from the tough outlook for all IPOs, the oilfield sector has been weighed down by an influx of new U.S. pressure pumping equipment, which is used in hydraulic fracturing to extract oil and gas from shale rock.

“Given existing market conditions, it seems unlikely FTS International will launch any IPO in the foreseeable future,” Chief Executive Marc Rowland said in an emailed statement. “We will continue to monitor industry and IPO market conditions. I am optimistic that conditions will ultimately improve for an IPO.”

The Texas company, having shelved its first IPO plan just over a year ago, refiled for an even larger initial sale of shares last September while also reporting revenue growth of 143 percent for the first half of 2011.

Singapore sovereign wealth fund Temasek Holdings holds about 40 percent of FTS, while Chesapeake Energy Corp - where Rowland was previously the chief financial officer - owns a 30 percent stake.

Chesapeake, in an effort to pay down debt, is also trying to raise money by selling its own oilfield services unit, having filed for an IPO in April.

FTS ranks fourth in North America in terms of pressure pumping capacity, after Halliburton Co, Schlumberger and Baker Hughes Inc.

The overall amount of pumping capacity grew by an estimated 50 percent last year. That growth coupled with persistently low natural gas prices and a surge in the prices for key fracking materials have eaten into margins across the sector.

Standard & Poor’s Ratings Services, while downgrading FTS debt just over two weeks ago, said the company’s operating margins had dropped to 22 percent in the first quarter from 40 percent a year before.

“We expect them to continue to slide over the next few quarters,” S&P wrote, adding that it did not expect to see an IPO for FTS this year.

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