A couple of interesting fracking IPOs this week. First, US Silica (SLCA) mines the sand for the fracking market. Second, Platinum Energy Solutions (FRAC) is a contract fracking service provider.
Both companies have interesting futures, but they are coming public when oil service companies are beaten down due to low natural gas prices.
This video from theSteet.com shows just how bearish the market has become regarding this sector. Though FRAC competitor C&J Energy Services (CJES) grew over 260% last quarter this IPO guy is hugely bearish on FRAC. He also is strangely focused on the 2 current customers when the company only has 2.5 rigs. It can only have 2 customers when you have long term take or pay contracts. Even the comment about our favorite CJES is completely off base. CJES has 24 month contracts and customers aren't just renting 'cars'. Hydraulic fracturing takes a sophisticated crew to operate these machines and properly fracture the oil wells.
If this is the typical mindset that is forcing this sector down, than I want to load the boat. Fracturing will only grow over time. With the demand for oil fracturing growing at leaps and bounds, overall demand is expected to remain strong.
Disclosure: Long CJES. Please review the disclaimer page for more details.