On January 20, Keane Group’s (FRAC) stock started trading on the market. It started trading at $22. This news followed Keane Group’s initial public offering (or IPO) of 26.76 million shares priced at $19.00 per share for gross proceeds of ~$408 million. Of the total shares issued, 15.7 million shares were offered by Keane Group while 11.06 million shares were offered by selling stockholders. FRAC will not receive any proceeds from the sale of stockholder shares.
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Keane Group disclosed that it plans to spend ~$149 million of the ~$250 million in net proceeds it received to pay down its debt. On September 30, 2016, FRAC’s long-term debt was ~$269 million. It will use the remainder for “general corporate purposes.”
In October 2016, FRAC’s oilfield services industry peer Mammoth Energy Services (TUSK) completed its IPO and raised $103 million.
Keane group, founded in 1973, is an oilfield equipment and services (or OFS) provider. It provides well completion and hydraulic fracturing services. On November 30, 2016, the company had 23 hydraulic fracturing fleets and eight wireline trucks. Its services are spread across unconventional tight oil shales, including the Permian Basin, the Marcellus Shale, the Utica Shale, the SCOOP/STACK Formation, and the Bakken Formation. Completion services accounted for nearly 90% of FRAC’s revenues in 9M16.
We’ll discuss Keane Group’s revenue, earnings, and drivers in this series. We’ll also discuss the recent equity issuances in the oilfield equipment and services (or OFS) industry and Wall Street’s expectations for these companies.