Keane Group Earnings Higher on Fracking Activity

Pure Fracking play Keane Group reported better than first quarter earnings after the close Wednesday. $FRAC footprint is in the Permian Basin, Marcellus Shale/Utica Shale, the SCOOP/STACK Formation and the Bakken Formation.

Pure Fracking play Keane Group reported better than expected first quarter earnings after the close Wednesday. $FRAC footprint is in the Permian Basin, Marcellus Shale/Utica Shale, the SCOOP/STACK Formation and the Bakken Formation.

Keane Group Fracking

Image: Houston Chronicle – Houston’s Keane Group $FRAC was the first IPO of 2017.

Earnings: 

Q1 EPS of -$0.07, with adjustments consensus was $0.22. Excluding one-time items and other adjustments net income for the first quarter of 2018 was $21.1 million, Revenue of $513M (+113.6% Y/Y) beats consensus by $10.95M.

Keane Group Inc NYSE: $FRAC

Market Reaction >After hours 15.60 +0.12 (+0.77%)

“Keane executed exceptionally well in the face of first quarter transitory challenges, stemming from extreme winter weather in late 2017 and early 2018,” said James Stewart, Chairman and Chief Executive Officer of Keane.

Highlights

  • Achieved first quarter 2018 Adjusted EBITDA of $91.3 million, compared to fourth quarter 2017 of $93.8 million
  • Reported annualized Adjusted Gross Profit per fleet of $17.0 million, compared to fourth quarter 2017 of $17.3 million
  • Remain at full utilization on all hydraulic frac fleets; averaged 26.0 deployed fleets during first quarter 2018
  • Updating delivery timing for newbuild frac fleet 27 to late-May, up from end of second quarter 2018
  • Entered into dedicated agreement for newbuild frac fleet 28 with expected delivery by end of second quarter 2018

Outlook

  • Total revenue is expected to increase to between $555 million and $575 million for the second quarter of 2018, driven by improvements in efficiency, price, and contribution from our first newbuild fleet in late-May.
  • Annualized Adjusted Gross Profit per fleet is expected to exit the second quarter of 2018 at approximately $20 million dollars.
  • Keane expects to maintain full utilization on its existing 26 hydraulic fracturing fleets throughout the quarter, and forecasts an increase to 27 active fleets upon the deployment of the first of its newbuild fleets in late-May 2018.
  • Keane expects to further ramp activity in its cementing business during the second quarter of 2018 and the remainder of the year.
  • By the end of 2018, Keane continues to expect run-rate revenue of between $70 million and $90 million on margins of between 20% and 25%.

“Completions services fundamentals remain attractive, and we expect further growth from higher pricing and improved efficiency,” said Greg Powell. “We continue to execute on our growth initiatives, including the successful addition of newbuild fleets under dedicated agreements. Our exit-rate performance during the first quarter establishes our confidence in achieving cash flow growth and improved profitability going forward.”

About The Keane Group

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.

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.

http://keanegrp.com/company/

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