Fracking Provider STEP Seeks C$200 Million in Canadian IPO

(Bloomberg) -- STEP Energy Services Ltd., a fracking services provider, plans to raise about C$200 million ($152 million) in the biggest initial public offering in the Canadian oil and gas industry in more than two years.

The shares are expected to be sold at C$14 to C$16 a piece, giving the Calgary-based oilfields service firm a valuation of about C$802 million at the high end of the range, based on a total of 50.1 million shares outstanding, according to an updated prospectus filed with regulators Monday. It would mark the largest IPO in Canada's oil and gas sector since Seven Generations Energy Ltd. raised C$932 million in October 2014, according to data compiled by Bloomberg. STEP is backed by Canadian private equity firm Arc Financial Corp.

Canadian Imperial Bank of Commerce and Raymond James are leading the stock sale. The banks have the option to buy more shares that could boost the proceeds to as much as C$230 million if exercised.

The offering comes as a turnaround in the North American fracking industry begins to accelerate amid higher crude prices. STEP provides coiled tubing and other equipment to producers in the Montney, Duvernay and Deep Basin regions in Canada and the Permian and Eagle Ford basins in the U.S., according to its website. Hydraulic fracturing is a technique that blasts water, sand and chemicals underground to release trapped hydrocarbons.

STEP said in a regulatory filing it planned to use the proceeds from the stock sale to pay down debt, capital expenditures and for other general corporate purposes.

Calgary-based fracking-sand supplier Source Energy Services Inc. also filed to go public in February and is seeking to raise about C$250 million, people familiar with the matter have said.

To contact the reporter on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Jacqueline Thorpe, Carlos Caminada