Based in Houston, Texas, Forum Energy Technologies (proposed FET) scheduled a $300 million IPO with a market capitalization of $1.6 billion at a price range mid-point of $19 for Thursday, April 12, 2012. S-1
Eight IPOs are scheduled for this week. The full IPO calendar is here.
Manager, Joint Managers: J.P. Morgan; BofA; Credit Suisse; Citigroup; Deutsche. Co Managers: Simmons; Tudor Pickering; Capital One Southcoast; Dahlman Rose; FBR; Howard Weil; Johnson Rice.
Cobbled together by private funds, FET is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry.
FET's growth has come from acquisitions rather than internal, organic growth.
Compared to Cameron International (CAM) and FMC Technologies (FTI), both mentioned as competitors in FET's SEC filing, FET is priced at a discount in terms of price-to-earnings, price-to-sales and price-to-book value.
FET is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry.
FET's product offering and related services include a mix of highly engineered capital products and frequently replaced items that are consumed in the exploration and development of oil and natural gas reserves.
In 2011, 40% of pro forma revenue was derived from the sale of capital products, while 53% was derived from consumable products, spare parts or aftermarket services, with the balance of the revenue coming from rental or other sources.
In 2011, 39% of pro forma revenue came from outside of the United States.
TWO BUSINESS SEGMENTS
Drilling and Subsea Segment
FET designs and manufactures products and provide related services to the drilling, well construction, completion, intervention and subsea construction and services markets. This segment contributed $755 million, or 61% to 2011 pro forma revenue.
Production and Infrastructure Segment
FET designs and manufactures products and provides related equipment and services to the well stimulation, completion, production and infrastructure markets. This segment contributed $491 million, or 39% to 2011 pro forma revenue.
ACQUISITION GROWTH, S-1 p52
Since the corporate combination/reorganization in August 2010, FET has completed the following acquisitons with one more 'on deck'
Wood Flowline Products, LLC, Feb 2011
Phoinix Global LLC, April 2011
Specialist ROV Tooling Services, Ltd., May 2011
Cannon Services LP, July 2011
SVP Products Inc., July 2011
AMC Global Group Ltd., July 2011
P-Quip Ltd., July 2011
Davis-Lynch LLC, July, 2911
We have entered into a non-binding letter of intent and are currently in negotiations with the owners of a privately-held oilfield services company. This company provides products and services that are complementary to, but not the same as, certain of our existing product lines. We have not completed our due diligence, including our evaluation of the financial performance of the assets, and we have not reached agreement with the owners on all material business points. Based on the information provided to us to date, we believe that the aggregate value for the company is in the range of $115 million to $140 million, and we expect to pay the purchase price in cash using available cash and borrowings from our senior secured credit facility.
S-1, page 10.
CURRENT INDUSTRY TRENDS
FET believes secular growth trends will help FET outpace general industry growth including the following:
• Increasing complexity of well construction.
• Growing service intensity associated with unconventional resources.
• Increasing investment in subsea equipment and related services.
• Heightened focus on product maintenance and certification.
• Increased capital spending in the oil and gas industry.
• Recovery in global drilling activity and new rig replacement cycle.
• Development of heavy oil reserves in Canada.
Although FET has no single competitor across all product lines, the companies FET competes with across the greatest number of product lines include Cameron International and FMC Technologies (FMC).
As of March 26, 2012, FET had approximately 3,150 employees.
USE OF PROCEEDS
FET expects to net $232 million from sale of 13 million shares, with the proceeds allocated to repay debt.
Stockholders plan on selling 2.6 million shares netting $46 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.