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Source Energy aims to raise $300-million in IPO

Hydraulic fracturing sand is seen an operation near Bowden, Alta., Tuesday, Feb. 14, 2012.

Jeff McIntosh/The Globe and Mail

Source Energy Services Ltd. said it aims to raise $300-million in an initial public offering this year as demand for sand used in shale drilling accelerates.

Calgary-based Source, backed by TriWest Capital Partners, said it would sell 15 million to 17.65 million shares at between $17 and $20 apiece, according to updated documents filed with regulators. Proceeds could reach $345-million if an overallotment option is fully exercised by underwriters. The offering is co-led by Bank of Nova Scotia, Morgan Stanley Canada Ltd. and Bank of Montreal.

It follows a planned stock sale by STEP Energy Services Ltd., which is targeting proceeds of at least $200-million in an IPO expected later this year. STEP is backed by private equity firm ARC Financial Corp.

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The companies are seeking to capitalize on a turnaround in oil-field activity that has stoked demand for services used in hydraulic fracturing, a high-tech extraction technique in which water and sand are blasted at high pressures into rock formations to free trapped oil and gas.

Source Energy said it would use proceeds to fund recent acquisitions and to repay debt.

The company describes itself as an integrated producer and distributor of sand in Western Canada with more than two million tonnes of annual capacity.

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About the Author

Jeff Lewis is a reporter specializing in energy coverage for The Globe and Mail’s Report on Business, based in Calgary. Previously, he was a reporter with the Financial Post, writing news and features about Canada’s oil industry. His work has taken him to Norway and the Canadian Arctic. More

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