Stories are growing of major companies and owners snapping up struggling independents and smaller operators amidst the downturn from the oil price war and the effects of the coronavirus pandemic. One of the latest involves oil billionaire Dan Wilks who, according to Reuters acquired 10% of struggling shale fracking company ProPetro Holding Corp. This, on top of the move by his Wilks Brothers investment group taking over a frack sand provider.
U.S. shale producers this year have stopped most drilling and fracking as oil prices fell below the cost of production. Spending on fracking is expected to fall 44% this year, say analysts, as Saudi Arabia and Russia last month vowed to pump full bore to grab market share, accelerating a glut brought on by the coronavirus pandemic.
Wilks personally took a 10% stake in ProPetro Holding Corp, a once fast-growing Texas oilfield firm that fracks and completes shale wells, according to a regulatory filing. It was the fracking mogul’s second bet on the distressed oilfield services sector in less than a week.
One Wall Street analyst who declined to be named said the acquisition of the shares could be a signal that Wilks Brothers LLC – which Dan owns along with brother Farris – is eying a deal.
ProPetro did not immediately respond to a request for comment.
Wilks Brothers already owns hydraulic fracturing firm ProFrac Services.
On Sunday, the investment group acquired recently-bankrupt Carbo Ceramics, a firm that makes ceramic technology used by the shale sector. The Wilks Brothers provided $15 million in debtor-in-possession financing under the deal.
Midland, Texas-based ProPetro has had a tumultuous six months after the company revealed an internal investigation into financial reporting and controls, and an investigation by the U.S. Securities and Exchange Commission (SEC). Its troubles culminated in the resignation of its CEO in mid-March, while oil prices were crashing to 18-year lows.
The billionaire Wilks brothers made their fortune on the shale boom through a company they founded called Frac Tech Services, which provided trucks to frackers. They sold their majority stake in 2011 for $3.2 billion to a consortium led by a Singapore sovereign fund.