Source Energy said to lower range on IPO amid oil slump

TORONTO (Bloomberg) -- Source Energy Services Inc., Canada’s largest distributor of fracing sand, has cut the size of its initial public offering to about C$250 million ($187 million) from C$300 million amid a decline in oil prices, according to a document obtained by Bloomberg News.

The Calgary-based company plans to sell shares at between C$13 to C$15 apiece, down from C$17 to C$20 a share previously, the document shows. The company expects to sell 16.7 million to 19.2 million shares, implying a raise of about C$251 million at the midpoint of the share and price range. 

A representative for the company wasn’t immediately available for comment. Source is backed by Canadian private equity firm TriWest Capital Partners. 

About 16.2 million to 18.7 million commons shares will be sold by a treasury offering, while between 500,000 to 600,000 will be sold through a secondary offering, the document shows.

Bank of Nova Scotia, Morgan Stanley, and Bank of Montreal are leading the share sale.

Last week, another Calgary-based fracing services company, STEP Energy Services Ltd., postponed its own IPO after U.S. oil this month dipped below $50/bbl for the first time in 2017 as near-record U.S. stockpiles and rising output weighed on the production reductions by OPEC and its allies.

Source said in a the filing earlier this month it plans to use the proceeds from the offering to pay for the acquisition of a new facility near Blair, Wisconsin, pay down debt and other capital expenditures. The company supplies and distributes fracing sand and has operations in Western Canada, North Dakota, Wisconsin, and Texas, according to its website.