There’s been a dry spell for initial public offerings of oilfield services companies over the last six months, with postponements more the order of the day than closings.
So the recent announcement that private equity firm-backed Liberty Oilfield Services was going ahead with the listing – and later increased the size – came as welcome news to the industry as well as to some Texas lawyers.
The Denver-based company, which has funding from Riverstone, Carlyle and Oakmont, said Jan. 2 it planned to offer 10.7 million shares at between $14 and $16 apiece, which would have raised $160.5 million at the range’s mid-point.
But very early on Friday, the company announced it had boosted the offering to 12.7 million shares at $17 per share, which would bring in almost $216 million.
The market was cheered by the issue. The company’s shares jumped 27.9% in their debut on the New York Stock Exchange on Friday to $21.75 per share.
The offering is expected to close Jan. 17.
What a difference eight months – and higher oil prices – makes. Just this past May, Liberty had postponed a $250 million IPO, leaving unused its planned ticker symbol “BDFC,” which stood for “Best Damn Frac Company.” (Its ticker symbol is now “LBRT.”)
Vinson & Elkins is one of the beneficiaries of the revived issue, advising Liberty with a team led by partners David Oelman and Ramey Layne in Houston. Others include counsel James Brown and associates Crosby Scofield, Anne Peetz and Jane Ehinmoro; partners John Lynch and Lina Dimachkieh and associate Neil Clausen on tax; partner Stephen Jacobson and associate Gina Hancock on executive compensation/benefits; and counsel Larry Pechacek on environmental. All are in Houston except for Hancock, who is in Dallas.
Baker Botts is counseling the underwriters on the IPO with a group of attorneys led by partner Joshua Davidson in Houston. Others included Dallas partner Jonathan Platt; associates Heath DeJean and Sunil Jamal in Houston; and Dallas partner Stephen Marcus and Houston associate Jared Meier on tax.
The underwriters are Morgan Stanley, Goldman Sachs, Wells Fargo Securities, Citi, J.P. Morgan and Evercore ISI.
Willkie Farr & Gallagher is advising the selling shareholder, which is an affiliate of Riverstone and Carlyle. That team included partner Bruce Herzog, who offices in Houston and New York, and associate Adam Lyons in Houston. Other attorneys in the firm’s New York office assisted on corporate and tax matters.
V&E’s Oelman said it’s nice to see the year kick off with an energy IPO pricing well-and-above range after a generally down year last year for such issues and energy equities in general.
“Not only would this have been difficult to do after the first quarter of last year, it suggests that there is the potential for significant new equity demand from institutional and retail investors for energy businesses in 2018,” he said. “I know the transaction is being watched closely by a number of energy players and expect it will be received as very good tidings.”
Indeed, another oilfield services company – SCF Partners-backed Nine Energy Services – emerged this week with plans for a $138 million IPO.
V&E partner Sarah Morgan in Houston and counsel Lanchi Huynh in Dallas are leading that one for Houston-based Nine Energy while Kirkland & Ellis Houston partners Matt Pacey and Justin Hoffman – who joined from Simpson Thacher & Bartlett in 2016 – are counseling the underwriters, which include J.P. Morgan, Goldman Sachs, and Wells Fargo.
FTS International also is expected to launch an IPO soon after making amendments to its filing in October. Jones Day partner Charles Haag in Dallas is working on that IPO with Shearman & Sterling in New York assisting the underwriters, which include Credit Suisse and Morgan Stanley.
BJ Services may also try to go public. It filed for an IPO this past summer with Latham & Watkins partners Sean Wheeler and Ryan Maierson advising it and Kirkland partners Matthew Pacey and Justin Hoffman assisting the underwriters, which include Goldman Sachs, Credit Suisse and Morgan Stanley.
On the Liberty issue, the company and its selling shareholder granted the underwriters a 30-day option to purchase up to 1.9 million shares at the IPO price less underwriting discounts and commissions.
Liberty said it expects to receive $194.5 million of net proceeds from the offering, or $220.4 million if the underwriters exercise their option to purchase all the additional shares.
Liberty intends to contribute the offering’s net proceeds to its unit Liberty Oilfield Services New HoldCo, or Liberty LLC, in exchange for limited liability company units.
Liberty LLC plans to use the net proceeds to repay borrowings incurred under Liberty’s credit facility, repay borrowings under its term loan and for general corporate purposes, including funding part of its expenditures this year and beyond.
If the underwriters exercise their option to purchase more shares, Liberty said it expects to use the proceeds to redeem shares of Class A common stock or Liberty LLC units from certain existing holders.