Shares of recent IPO Quintana Energy Services (QES) are popping higher this morning following the expiration of the 25-day quiet period. With that expiration, those firms involved with QES' IPO are now able to publish research and estimates for the first time. And, as we discuss in further detail below, the consensus skewed decisively to the bullish side.
For those unfamiliar with QES, here is some background on the company:
QES is a provider of oilfield services to onshore oil & gas exploration companies operating in both conventional and unconventional plays in all of the active major basins throughout the US. Its primary include:
- Directional drilling services: Directional drilling services enable E&P companies to drill horizontal wells that offer greater exposure to targeted reservoir horizons than vertical wells. QES enables efficient drilling and guidance of the horizontal section of a wellbore using QES’ advanced fleet of downhole motors and 117 measurement while-drilling (MWD) kits.
- Pressure pumping services: This includes hydraulic fracturing, cementing and acidizing services. These services are supported by a pressure pumping fleet. Its primary pressure pumping focus is on large hydraulic fracturing jobs.
- Pressure control services: QES provides various forms of well control for completions and workover applications through its 23 coiled tubing units, 36 rig-assisted snubbing units and ancillary equipment.
- Wireline services: This includes 50 wireline units providing a full range of pump-down services in support of unconventional completions, and cased-hole wireline services enabling reservoir characterization.
The company has not yet issued its first quarterly report as a public company, nor has it confirmed a date for its release. But, its growth has been impressive as revenue surged by 102% to $307 million for the first nine months of 2017. QES was also profitable during this span.
Circling back to this morning's initiations, so far we see four published, and each one landed on the bullish side. Specifically, Stephens and Piper Jaffray assigned Overweights, both with $14 price targets; Evercore ISI initiated it with an Outperform and $13 target; and BofA Merrill Lynch went with a Buy and $12 target.To conclude, after a weak pricing ($10 vs. $12-$15 expected price range) and opening (-10%), QES is showing signs of life and today's set of bullish initiations should help its cause. It's worth noting that when QES went public on February 9, the broader markets were getting slammed lower and investors were not in a "risk-on" mindset. Therefore, QES' slow start was not a reflection of its fundamentals, but, rather a jittery market. Consequently, QES' valuation took a diver lower, creating a more attractive risk\reward profile, which likely played a role in today's bullish initiations.