Investors may soon have another oil services stock to choose from when playing the energy sector as Platinum Energy Solutions (NYSE:FRAC) gears up for an initial public offering (IPO). The company provides hydraulic fracturing, coiled tubing and other related services to exploration and production companies operating in the United States.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Platinum Energy Solutions has one hydraulic fracturing fleet operating and another one set to start working in October 2011. The company's first fracturing fleet consists of 45,000 hydaulic horsepower (HHP), which started working in August for Petrohawk Energy in the Eagle Ford Shale. Petrohawk Energy was purchased by BHP Billiton (NYSE:BHP) in August 2011.

EnCana (NYSE:ECA) has leased the company's second fracturing fleet, which has a total capacity of 75,000 HHP. This fleet is set to start working in the Haynesville Shale this month.

Platinum Energy Solutions also has some ambitious expansion plans to take advantage of the strong demand for fracturing services in North America. The company has a third fleet on order that will be delivered in November 2011, bringing its total capacity to 167,250 HHP.

Platinum Energy Solutions has two other fleets in the initial planning stages and expects these units to be delivered before the end of 2012. This would boost the company's total capacity to 257,250 HHP.

Coiled Tubing
Platinum Energy Solutions also provides coiled tubing services to operators in the United States. During this process, a truck-mounted flexible steel pipe is inserted into production tubing to perform services on an oil and gas well. The company plans to have 13 coiled tubing units in operation by the end of 2011.

Other Operators
Another oil services company that recently went public was C&J Energy Services (Nasdaq:CJES), which conducted an IPO in July 2011. The company, along with some selling stockholders, sold 13.225 million shares at $29 per share. Although demand for the offering was strong and oversubscribed, the stock sold off with the general market, falling approximately 50% before bouncing back with the most recent rally.

C&J Energy Services is in many of the same businesses as Platinum Energy Solutions, including hydraulic fracturing, coiled tubing and pressure pumping. The company has eight fracturing fleets either in service or under construction.

Merger Activity
Investors may need another oil service company, as the industry has seen some recent merger activity with Superior Energy Services (NYSE:SPN) and Complete Production Services (NYSE:CPX) agreeing to a $6.2 billion combination.

Superior Energy Services reported that 39% of its revenue in the 12-month period ending June 30, 2011, was leveraged to the North American land drilling cycle. The balance of the company's revenue comes from activity in the Gulf of Mexico and the international segment.

Complete Production Services reported that 31% of its revenue was generated from pressure pumping in the second quarter of 2011. The company has 13 fleets in operation in the United States.

The Bottom Line
The demand for hydraulic fracturing services by the oil and gas industry is intense, and Platinum Energy Solutions should see strong growth as the company's fleets come on line over the next year. The only risk that might disrupt this growth scenario is an renewed contraction in economic activity. (For additional reading, see What Determines Oil Prices?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  2. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  7. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  8. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  9. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  10. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  4. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  5. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  6. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>

You May Also Like

Trading Center