Keane Group’s one-year returns versus the industry
Keane Group’s (FRAC) one-year returns were -7.7% as of May 25. In comparison, since May 26, 2017, the Energy Select Sector SPDR ETF (XLE) increased 12.0%. XLE tracks an index of US energy companies in the S&P 500 index. The VanEck Vectors Oil Services ETF (OIH) witnessed 3.0% one-year returns. OIH tracks an index of 25 oilfield equipment and services companies. So FRAC underperformed OIH and XLE in the past year.
Crude oil price and rigs
On May 25, West Texas Intermediate (or WTI) crude oil prices were ~36% higher than a year ago. Led by crude oil price’s strength, the rig count increased 15% in the United States in the past year. Learn the latest on energy prices in Market Realist’s Is Oil Losing Strength before Memorial Day Weekend?.
Some recent factors that affected FRAC’s returns
- On May 16, FRAC announced that Robert W. Drummond would be appointed CEO. The current Chairman and CEO, James Stewart, is to step down from the CEO role by September 1
- On May 2, Keane Group released its Q1 2018 financial results. FRAC’s revenues more than doubled in the first quarter compared to Q1 2017. Strong utilization of FRAC’s hydraulic fracturing fleets, revenue addition due to the acquisition of RockPile Energy Services, and an operating efficiency improvement resulted in FRAC’s revenue rise in the first quarter.
- FRAC reported an $8.2 million net loss in the first quarter, which was an improvement compared to its $64.3 million net loss a year ago. Despite higher input costs, the Q1 2018 reported net earnings improvement came from higher revenues and operating efficiency improvements. FRAC’s Q1 2018 net earnings included a $13.2 million payment related to contingent value rights associated with the acquisition of RockPile and $13.0 million in transaction costs in a secondary stock offering.
- Led by the rise in revenues, FRAC’s cash from operating activities (or CFO) improved significantly in Q1 2018 over the previous year. FRAC’s free cash flow also improved to $6.8 million in Q1 2018, compared to -$57.4 million in Q1 2017.
In this series, we’ll look at Keane Group’s implied volatility, its correlation with crude oil, and Wall Street’s recommendations. We’ll discuss Keane Group’s stock price forecast next.