Select Energy Services Files for IPO

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Select Energy Services has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering (IPO). No pricing details were listed in the filing, although the offering was valued up to $100 million in the original filing. The company intends to list its stock on the New York Stock under the symbol WTTR.

The underwriters for the offering are Credit Suisse, FBR, Wells Fargo, Merrill Lynch, Citigroup, JPMorgan, Deutsche Bank, RBC Capital Markets, Simmons and Tudor Pickering Holt.

This company is a leading provider of total water solutions to the U.S. unconventional oil and gas industry. Within the major shale plays in the United States, management believes that the firm is a market leader in sourcing and transfer of water (both by permanent pipeline and temporary pipe) prior to its use in drilling and completion activities associated with hydraulic fracturing, which it collectively refers to as “pre-frac water services.”

In most of its areas of operation, Select Energy provides complementary water-related services that support oil and gas well completion and production activities, including containment, monitoring, treatment, flowback, hauling and disposal. These services are necessary to establish and maintain production of oil and gas over the productive life of a horizontal well. Water and related services are increasingly important as oil and gas exploration and production (E&P) companies have increased the complexity and completion intensity of horizontal wells (including the use of longer horizontal wellbore laterals, tighter spacing of frac stages in the laterals and increased water and proppant use per foot of lateral) in order to improve production and recovery of hydrocarbons.

Historically, the firm has generated a substantial majority of its revenues through providing total water solutions to customers. It provides services to major integrated and large E&P companies, who typically represent the largest producers in each of its areas of operations.

The company intends to use the net proceeds from this offering for a few things:

  • Up to $51 million will be used to repay borrowings incurred under our credit facility to fund the cash portion of the purchase price of the Permian Acquisition.
  • $10.7 million will be used for the cash settlement of outstanding phantom units at SES Holdings.
  • Approximately $5 million will be used for growth capital expenditures in the Bakken, including the expansion of the Bakken Pipeline systems.
  • The balance will be used for general corporate purposes, including other organic and acquisition growth opportunities.