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The Pure Fracking play Keane Group $FRAC reported mixed second quarter earnings after the market close Monday. $FRAC was the first IPO of 2017 and it's footprint is in the Permian Basin, Marcellus Shale/Utica Shale, the SCOOP/STACK Formation and the Bakken Formation.

Houston's Keane Group $FRAC was the first IPO of 2017 with footprint in the Permian Basin, Marcellus Shale/Utica Shale, the SCOOP/STACK Formation, the Bakken Formation and other active oil and gas basins.

Earnings: Net loss of $11.2 million, compared to first quarter 2017 of $72.3 million. EPS of -$0.11 Analysts' forecast consensus was EPS of $-0.07, misses by 4 cents Revenue of $323.1 million, compared to first quarter 2017 of $240.2 million. Revenue beat by $5.58 million

Reaction:  Keane Group Inc NYSE: FRAC - Jul 31, Closed 15.33 -0.25 (- 1.60%) After-hours: UNCH 15.33

The company is "one of the largest pure-play providers of integrated well completion services in the U.S., with a focus on complex, technically demanding completion solutions. Our primary service offerings include horizontal and vertical fracturing, wireline perforation and logging and engineered solutions, as well as other value-added service offerings." Keane website.

  • Achieved second quarter 2017 Adjusted EBITDA of $36.0 million, compared to first quarter 2017 of $13.1 million
  • Averaged 18.3 deployed hydraulic fracturing fleets during second quarter 2017; exited quarter with 19 deployed fleets
  • Increased annualized Adjusted Gross Profit per fleet to $10.5 million, compared to first quarter 2017 of $6.3 million

James Stewart, Chairman and Chief Executive Officer of Keane. “The robust activity experienced at the start of the year accelerated in the second quarter, allowing us to deploy two additional fleets at leading edge pricing and exit the period with 19 deployed fleets. While we expect the favorable market backdrop to continue throughout 2017, we frequently communicate with customers to assess the potential impact of current commodity price volatility. Partnering under our dedicated agreement model with top-tier customers who maintain consistent through-cycle completions programs and our multi-basin operating footprint support our business today and over the long-term.”

Third Quarter 2017 Outlook

Revenue for the third quarter of 2017 is expected to increase between 45% and 60% sequentially. Approximately 60% of this sequential growth is forecasted to be driven by contribution from five active hydraulic fracturing fleets acquired during the RockPile transaction, while the remaining 40% will be driven by higher pricing, greater efficiencies and the deployment of an additional hydraulic fracturing fleet. Keane expects to exit the third quarter of 2017 with 25 active hydraulic fracturing fleets, including those acquired during the RockPile transaction.

Leading edge annualized Adjusted Gross Profit per fleet is expected to increase to the mid-to-high teens, up from approximately $12-13 million in May 2017, driven by constructive supply and demand dynamics. Based on current market conditions, Keane expects its full portfolio of hydraulic fracturing fleets to be deployed and accrue toward these leading edge margins ratably through the end of 2017.

Cementing and workover operations acquired with the RockPile transaction together represent a current annual revenue run rate of $35-40 million, with 10-15% gross margins. Keane intends to further evaluate these businesses with regards to opportunities for optimization and growth, including the potential to activate its idle cementing assets. 

The FRAC IPO

The $FRAC IPO opened at $22 after pricing its initial public offering of 26,760,000 shares of its common stock at the high end of the expected range of the public offering price of $19.00 per share. 15,700,000 of the shares were offered by the Company and 11,060,000 shares were being offered by the selling stockholder. The selling stockholder also granted the underwriters a 30-day over-allotment option to purchase an additional 4,014,000 shares of the Company's common stock.

  • The IPO was greater than 3 times larger than last year's oilfield services IPO Mammoth Energy $TUSK
  • Footprint located in the Permian Basin, Marcellus Shale/Utica Shale, the SCOOP/STACK Formation, the Bakken Formation and other active oil and gas basins.
  • Acquired by Cerberus in 2011, positioned to take advantage of a rebound in E&P spending.

Keane Group Acquired the U.S. Assets of Trican Well Service Ltd in January 2016

Keane group press releases 11 months ago

[quote]Houston, Texas (January, 26, 2016) –Keane Group, a privately-held U.S. based well completion services company, has agreed to acquire the majority of Canada-based Trican Well Service Ltd.’s (TSX: TCW) U.S. assets for total consideration of U.S. $247 million, comprised of U.S. $200 million in cash plus a minority interest stake in Keane Group. With the acquisition, Keane will triple its frac capacity, acquire access to proprietary technology, add applied engineering capabilities and further expand the Company’s service offerings and geographic reach in the U.S. Learn More[/quote]

http://keanegrp.com/company/

http://investors.keanegrp.com/press-releases/2017/07-31-2017-222512075

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