Oilfield service and supply firms have been claiming some of the public-equity pie for themselves, in their initial public offerings last year and so far this year. Eight have raised a combined $937 million in their first public equity offerings, and a ninth that was readying to price at press time was expected to bring the total to $1.16 billion. Six priced in 2000-five of these launching after interest in dot-com IPOs had begun to wane in the spring of 2000. Two more priced this year and a third was in the chute. "I suppose the IPO market is interested in oil-service offerings because oil-service stocks are going up," says Allen Parks, executive director, CIBC World Markets in Houston. Parks worked on service-company IPOs, secondary offerings and other fund-raisers while at Dain Rauscher Wessels in Dallas. He recently transferred to CIBC, where he does the same. While at Dain, Parks was involved in the Hydril Co. offering in September 2000 that raised gross proceeds of $128 million. CIBC missed the oil-service IPO boat of 2000 and early 2001 but its scenery changed in June, as a co-underwriter of the $80-million Torch Offshore Inc. initial equity offering. Houston-based Simmons & Co. International was an underwriter of four of the six service-side IPOs of 2000 and one of the two of 2001 through early June. Two others in which Simmons was involved-Asco Plc and Basic Energy Services Inc.-in 2000 were postponed. "These were essentially an issue of market timing," says Scott Gill, oil-service analyst for Simmons. Asco Plc Aberdeen, Scotland-based Asco and Midland, Texas-based Basic had filed their IPO plans in the spring of 2000 but never got off the ground. Asco serves the E&P industries in northern Europe and in the Gulf of Mexico with logistical and supply-chain management services, and had hoped in early June 2000 to raise up to US$212 million by selling 12.5 million shares at up to $17 each. During the following few weeks, these hopes were lowered to US$120 million-10 million shares at $12 each. And, then it was all postponed indefinitely. Its lead underwriters were Donaldson, Lufkin & Jenrette and Salomon Smith Barney. Proceeds were to pay debt and fund acquisitions. Basic Energy Services Inc. Meanwhile, Basic was trying to sell 3.7 million shares at up to $16 each for gross proceeds of as much as $59 million, and it too was postponed indefinitely. With possibly the third-largest well-servicing-rig fleet in the U.S., Basic provides well maintenance, workover and fluid-hauling services primarily in New Mexico, Texas, Oklahoma and Louisiana. It hoped to use proceeds to acquire six competitors, adding to the 16 acquisitions it had made from 1996-98. A comanager of the deal with Simmons was Johnson Rice & Co.; the lead underwriter was Prudential Securities Inc. The six oil-service issues that did price in 2000 did so at levels certainly lower than their current market values and some had difficulty at times with remaining above their IPO presale price. "Osca Inc. priced at $15.50 and traded at one time as low as $12," Scott notes. Osca Inc. While Asco and Basic were choking at the gate in June 2000, Lafayette, Louisiana-based Osca (Nasdaq: OSCA) leaped through it. Osca provides well-completion fluids and services and downhole completion tools primarily to the Gulf of Mexico E&P market but also in some international markets. A long-time oil-service business of Great Lakes Chemicals, Osca is an acronym of its former moniker: Oil Service Co. of America. The parent spun off part of its interest in Osca in the IPO. This summer, it is conducting a share exchange program, under which it will divest its majority interest. In its IPO, Osca sold 5.6 million shares at $15.50 each for gross proceeds of $87 million, most of this going to Great Lakes Chemicals. The stock price hovered around the presale price for most of 2000 and recently improved to nearly $30. At press time, it was $23.24. Oil States International Inc. Until recently, it was difficult for the oil-service IPO stocks to trade higher than they had priced. Houston-based Oil States International Inc. (NYSE: OIS) struggled to price in early February 2001, finally selling 10 million shares at $9 each, down from an original plan of 10.3 million shares at up to $18 each. Since then, shares have ranged from $8.95 to $15, and were $12.30 in mid-June. Simmons was involved in this IPO too, as a co-underwriter. Lead underwriters were Merrill Lynch & Co. and Credit Suisse First Boston. "Oil States' stock is doing well now," Gill says, as the equity investment market is more confident in oil-service stock earnings. Oil States International was formed with the IPO-simultaneous roll-up of four privately held companies: Houston-based Oil States Industries, Sooner Inc. and HWC Energy Services Inc. and Canadian firm PTI Group Inc. Investment funds SCF-III and IV, led by industry investor L.E. Simmons, owned majority interests in the four firms. FMC Technologies Inc. Readying to price at press time was FMC Technologies Inc. (NYSE: FTI), the oil-service business of Chicago-based conglomerate FMC Corp., to become the ninth oil-service IPO of the past 18 months. The Houston-based subsidiary provides subsea drilling and production systems, including subsea flow-control, and other services to the E&P sector, particularly in deep water. Fiscal year 2000 revenue was $1.8 billion. In early June, the company backed off its initial plan of raising as much as $350 million and set the price range at $19 to $21 a share, with 11 million shares on the table. The lead underwriter of this deal was Merrill Lynch & Co., and comanagers were Credit Suisse First Boston and Salomon Smith Barney. Torch Offshore Inc. Another subsea services company, Gretna, Louisiana-based Torch Offshore (Nasdaq: TORC) launched public trading in early June 2001. The company constructs small-diameter flowlines and other offshore infrastructure, and its niche is in the shallow-water natural gas fields of the Gulf of Mexico, although it has deepwater operations as well. The company's fleet consists of eight construction and service vessels. The company sold 5 million shares at $16 each for gross proceeds of $80 million, which is to pay for construction of another vessel, Midnight Warrior; fund construction of a shore facility and equipment upgrades; and pay debt. In its first week of public trading, the stock ranged from $15.24 to $19 and was $16 at press time. Underwriters of this IPO were UBS Warburg (lead), CIBC World Markets and Howard Weil. Natco Group Inc. First among the oil-service IPOs of 2000-01 was Houston-based Natco Group (NYSE: NTG), which provides separation and other equipment and services at the wellhead. Its heaters prevent solids from forming in gas streams and reduce the viscosity of oil. Its dehydration and desalting units remove water and salt from oil and gas. And, its separators segregate oil, gas and water. Gas-conditioning units and membrane-separation systems remove carbon dioxide and other contaminants from the gas stream. In January 2000, Natco sold 7.5 million shares at $10 each for gross proceeds of $75 million, which it used to fund an acquisition and to pay debt. The stock's price almost immediately fell in public trading, bounced about for months, and finally found buoyancy this year, remaining mostly above the presale price. It was $11.30 a share at press time. Universal Compression Holdings Inc. Pricing next was Houston-based Universal Compression Holdings (Nasdaq: UCO), which primarily rents and services natural gas compressors, which force gas from the wellhead into gathering systems, processing plants or through pipelines. Its offering in May 2000 was of 7 million shares at $22 each, raising $154 million to pay debt. The stock rocketed upon public trading and has held well above its presale price, jumping as high as $40.50 at one time and trading at $33.29 at press time. Chiles Offshore Inc. Osca followed, on June 14, and then Chiles Offshore (Amex: COD) slipped through September 18. An operator of jackup drilling rigs in the Gulf of Mexico, it owns two: the Chiles Columbus and the Chiles Magellan. The rigs are "ultrapremium" jackups, which can drill in greater water depths than traditional jackups, and faster and more reliably. Chiles sold 7.8 million shares at $19 each for gross proceeds of $148 million, which it has used to pay debt and fund fleet expansion. Another ultrapremium jackup is under construction in Singapore and is to be delivered in the spring of 2002. Shares of Chiles fell below the presale price shortly after trading began but have improved to more than $20 each during most of this year, to more than $28 at one point. At press time, the stock was $24.75. Hydril Co. Immediately following Chiles was Hydril Co. (Nasdaq: HYDL), on September 27. The Houston-based firm manufactures and sells connection and pressure-control products to contain fluid and gas pressure during drilling, completion and maintenance of wells. It sold 7.5 million shares at $17 each, raising $128 million, before expenses, for an expansion into producing tubular connections in the U.S. and Canada, and to upgrade existing machine tools that are used to manufacture its pressure-control products, and to pay continued existing- and new-product research and development. The stock also fell below the presale price, after public trading began, but was lifted this spring to more than $33 and was about $30 at press time. Some of this activity was complicated by that Hydril's equity is arranged in two stock classes, with one having less voting power than the other. W-H Energy Services Inc. Following Hydril was another Houston-based oil-services vendor, W-H Energy Services (Nasdaq: WHES), on October 10. It sold 10 million shares at $16.50 each, raising $165 million primarily to pay debt. The company provides drilling, completion and production products and services in the Gulf of Mexico and in the North Sea and onshore on the Gulf Coast, including logging- and measurement-while-drilling, drill pipe and downhole motors and fluids. And then there was another lull. Virtually no IPOs of any type priced during the last two months of 2000 and in January 2001. Pricings usually slow in November through year-end, but they essentially halted. Four weeks into 2001, only three IPOs of any sector priced. Oil States International then stepped up and squeezed 10 million shares through at $9 each, raising half as much as originally planned. Until the Natco offering in January 2000, there had been only one oil-service IPO-that of Houston-based Horizon Offshore Inc. (Nasdaq: HOFF) in April 1998-since December 1997. That was when Carencro, Louisiana-based Omni Energy Services priced, barely slipping through the closing oil-industry IPO window that had been wide open for more than two years. IPO attention then turned to technology stocks through the spring of 2000, and then closed to that sector soon after. Energy stocks began to get their feet in the door, again. They picked up the ball and have been running with it, so far this year. Energy-related IPOs represented nearly a third of all the initial offerings of 2001 (totaling 35) through June 8. Among these are the oil-service offerings Oil States International and Torch Offshore. Some of the oil-service pricings of 2000 were shoved through small windows, as demonstrated by their lackluster reception in public trading until this year. Parks at CIBC World Markets notes that the Philadelphia Oil Services Index was in a slump from October 2000 through March 2001, falling nearly 14%. Gill at Simmons & Co. says, "It's only been in the past six weeks or so that these [recent-IPO] stocks have taken off. They have 'worked' but it has taken six to nine months for some of them." Parks concludes, "One day people love energy; the next day, they hate it. Who knows why these IPO stocks are doing well now? I think oil-service stocks have been buoyed recently by their strong earnings and, at least this week, a perceived shortage of hydrocarbons and of services to extract hydrocarbons."