Source Energy Said to Seek C$175 Million in IPO in Price Cut

(Bloomberg) -- Source Energy Services Ltd., Canada's largest distributor of fracking sand, is seeking to raise C$175 million ($130 million) in an initial public offering, reviving the deal after it was postponed last month as oil prices fell, according to people familiar with the sale.

The Calgary-based company plans to sell the shares at C$10.50 apiece, down from the previous target of as much as C$19 a share. The IPO is expected to be priced Thursday, and would value the company at about C$500 million, the people said.

The company had originally sought to raise about C$300 million in the IPO before postponing it, citing “adverse capital market conditions.” The oil-services company plans to sell 16.7 million shares from the treasury and dropped plans for a secondary sale, the people said.

Oil rallied back above $50 a barrel a week ago after some OPEC nations supported a possible extension to their six-month deal, while production halts in the U.K. North Sea and Canada have since helped bolster prices.

A representative for Source Energy couldn't be reached for comment outside of business hours.

Source is backed by private equity firm Triwest Capital Partners. The company will trade on the Toronto Stock Exchange under the ticker “SHLE,” according to marketing documents.

The share sale is being led by Bank of Nova Scotia, Morgan Stanley and Bank of Montreal.

This would still be the largest Canadian oil and gas IPO since Seven Generations Energy Ltd. raised C$931.5 million in September 2014.

--With assistance from Angelina Rascouet

To contact the reporters on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net, Michael Bellusci in Toronto at mbellusci2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, David Scanlan, Steven Frank