Inside This Issue: "The US rig count recovery curve may in fact provide some of the earliest evidence available that oilfield cyclical durations are indeed compressing. Even as the Permian trajectory appears to stall now, the sharpest US drilling recovery in history rolls on."
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Mar-21-17  Issue 39
Hi Joseph,

The seventh North American frac IPO filing in three months hit late last week as Solaris Oilfield Infrastructure entered the picture.

The rush is on to get in while the getting is still good. Unfortunately, since private service providers began to hit the bid, uncertainty around the sustainability of the Lower 48 recovery has crept back into the public equity markets.

Cracks in the oil price floor, fears over capacity additions, and what the inflation wildcard means for E&P programs are all concerns weighing heavily on oilfield service investor minds now.

For the first two IPOs to float, it hasn't been smooth sailing. Keane Group had a strong early showing, but now the stock is down 20% in the 30 days since it went live. ProPetro's IPO priced at $14 last week, reduced from the planned range of $16-$19. As of this writing its shares are threatening to move into the red.

This commentary on the headwinds now facing pending IPOs is not intended to take anything away from Solaris Oilfield's product, which has been well received in the field. In our extensive last mile logistics research earlier this year, Solaris left us with a strong positive impression.

In an update today, we've extracted some key takeaways from the Solaris S-1 filing. Our highlights address the company's last mile ambitions (which go well beyond well-site storage), pricing trends, core growth trajectory, R&D focal points, and a nod to the dynamic competitive landscape.

Questionable Wall Street demand for frac equity issues aside, the outlook for Solaris is a strong one. They've been growing rapidly during the downturn, taking market share because they have a more efficient well-site storage solution than most we've encountered. Whatever happens with their IPO and the Lower 48 market in general, this company is making a big and lasting impact on the last mile.

A new worry that may get some looks from investors soon is a stalling trend we've noticed in the Permian Basin growth curve. As the sharpest recovery in US land drilling history rolls on, the Permian is currently taking a break to digest its recent explosive growth. We've got thoughts on why and charts in the full update here.

Staying on topic in the proppant market, our next story is on the acquisition of a small fine grade frac sand outfit announced Tuesday morning. More important than the deal itself, in our view, was the revelation that it's not just the big boys making brownfield expansion plans. With some rather inexpensive and expedient tweaks to the target facility, Mammoth Energy Services will add 1mmtpa to annual production by year-end. Play these tweaks out across 80+ US frac sand mines, and you can start to understand why investors are concerned over a softening market (read more).

Finally shifting our focus offshore, M&A returned as expected when Borr Drilling made good on speculation that it would be making a move on Transocean's jackup fleet. While some may criticize Transocean for selling at the bottom, Tor Olav Troim paid fairly in our view. We like the deal for Transocean because of the price/rig paid, the added liquidity, and the focus it returns to the established drilling contractor - which are all factors we cited in our original report on deal chatter last week (read more).

Best wishes for a productive week.

Joseph Triepke
Founder & Principal Research Analyst | Infill Thinking

A Last Mile Solution Provider Is Going Public

Solaris Oilfield Infrastructure Inc. filed for a $100mm IPO late last week. Solaris has a fast growing well-site sand storage offering that helps alleviate the last mile logistics bottleneck in frac sand. READ MORE...

As The Sharpest US Drilling Recovery Ever Continues, The Permian Is Being Left Out Now

We do not believe the Permian drilling growth story is over, but the factors responsible for a "cooling off period" in the Basin today are real. They could continue to weigh on West Texas growth in the short-term.READ MORE...

Tor Olav Troim Moves On Transocean’s Jackup Fleet As Expected

On Monday, Borr Drilling put out a press release confirming recent offshore rig M&A speculation. The startup drilling contractor has signed an LOI with Transocean for the purchase of 15 jackups. READ MORE...

Frac Sand M&A Deal Highlights The Threat Of Brownfield Expansion

A key deal component of a frac sand mine transaction announced today is brownfield expansion of the target’s sand mine facility in Taylor Wisconsin. READ MORE...



About this series: More than just the same old news, frequent Infill Thoughts updates provide context and analysis on the most important oilfield story-lines. Relevant with a long-shelf life, these updates offer new angles that can’t be found anywhere else. Posted daily at, we email these updates to subscribers twice weekly.

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