Garcia&#39;s Take: Flowco&#39;s IPO Success Tied More to Company Than Sector — WSJ

By Luis Garcia

Flowco Holdings' successful $427.2 million initial public offering might not necessarily augur a resurgence in oil-field services IPOs, according to energy bankers.

Houston-based Flowco saw its share price jump about 24% in its trading debut Thursday at the New York Stock Exchange. The first-day pop sent the company's valuation to some $2.6 billion and marked the largest IPO of an energy company by money raised in nearly six years, according to research provider Renaissance Capital.

But energy bankers say the success is likely tied more to the unique combination of services Flowco offers than to a recovery in stock investor appetite for the sector.

Oil-field-services investors Global Energy Capital and White Deer Energy formed the business last year by combining three portfolio companies to pave the way toward an IPO. The private-equity firms own a roughly 65% combined stake in Flowco following the IPO, said Joe Bob Edwards, Flowco's chief executive and a former managing partner at White Deer.

"It's been about a six-month journey from that date to today," said Edwards. "We targeted a January listing and we made it."

Flowco provides artificial-lifting services that use mechanical systems or inject natural gas into wells to help extract the heavier oil. It also supplies vapor-recovery units that capture methane released by crude or natural gas on their way to pipelines.

Such services meet the needs of profit-driven oil producers seeking to make the most of their existing wells, said Brian Williams, a managing partner at investment bank Carl Marks & Co. who also previously led oil-field-services companies. Flowco's methane-abatement services, in turn, enable those producers to profit from the sale of captured methane while complying with regulations that forbid flaring of natural gas at oil fields, he said. This combination of services makes Flowco more attractive to investors who might be reluctant to back fossil fuel-related businesses, according to Williams. Indeed, Flowco in pre-IPO regulatory filings highlighted the "economic and environmental benefits" of its services.

"They aren't saying, 'Look, we're going to drill and frack a bunch of wells and we're going to grab market share,'" Williams said. "It's more like, 'We're going to optimize production using technology and clever equipment and we've got this way to capture the methane.'"

Public investors' appetite for oil-field-services providers remains low, he said, citing those businesses' much lower market-value-to-earnings ratios compared with other types of companies in the S&P 500 stock index. It is a sign that the outcome of Flowco's IPO was more "about the company than the industry," he added.

"I think the IPO was well thought through, well-timed and well-priced, with Flowco having a production and technology orientation more so than other oil-field names," Williams said. "I don't know if you could have an IPO of a land-drilling-services company right now."

The new Trump administration plans to make it easier for oil companies to drill wells offshore and in federal land, while relaxing tailpipe emission rules, all part of an effort to boost the U.S. oil-and-gas industry, The Wall Street Journal has reported. Energy fund managers, however, said oil companies are unlikely to revert to their old, cash-burning strategies of growth at any cost.

Edwards said that while government support for the industry is welcome, he hopes that "any kind of political involvement stays at a minimum."

"These businesses have been around for over 10 years and have been successful through multiple administrations," he said of the companies that formed Flowco.

Flowco has the ability to expand even if U.S. oil production doesn't, as producing wells requires enhancing services along their entire lifetimes to slow declines in output, Edwards added.

Williams said that if drilling activity decreases too much and for too long, "eventually the production that Flowco gets to service diminishes." As with all other oil-and-gas businesses, Flowco's fortunes will depend on the future need for fossil fuels, he said.

"It's not sleight of hand but, at the end, we're all tied to the price and demand for oil and natural gas," he said. "Those are trends that nobody in the industry can control."

Write to Luis Garcia at luis.garcia@wsj.com

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Energy Groups, States File Suit to Overturn Biden Offshore Drilling Ban — OPIS

Dow Jones Newswires

A pair of oil and gas industry trade groups and several coastal states filed suit seeking to overturn the Biden administration's recent action restricting oil and natural-gas drilling in millions of acres of federal offshore waters.

While President-elect Donald Trump has already vowed to quickly reverse the restrictions once taking office Monday, it is unclear if he has the authority to do so or if it will require action by a closely divided Congress. A successful lawsuit could further cement any repeal of Biden's actions.

"As we move forward with a legal challenge, we continue to urge Congress and the incoming administration to use every tool at their disposal to restore a pro-American energy approach to federal leasing," American Petroleum Institute Senior Vice President Ryan Meyers said Friday in an announcement about the suit, filed in the U.S. District Court for Western Louisiana.

In addition to API, the states of Alaska, Alabama, Georgia, Louisiana and Mississippi as well as the Gulf Energy Alliance are plaintiffs in the suit, which claims Biden's action is unconstitutional and exceeds the president's authority under the Outer Continental Shelf Lands Act of 1953.

Last week, Biden used a provision of the act to withdraw more than 625 million acres of waters along the East and West coasts, the eastern Gulf of Mexico and portions of Alaska's Northern Bering Sea from oil and natural-gas leasing.

Biden said he was acting to combat climate change and protect the environment in the areas.

Environmental groups had urged Biden to use the OCSL act to protect the lands because of a previous court ruling that said while the act grants presidents the authority to block drilling on certain lands, it doesn't allow them to reinstate it.

With narrow majorities in both branches of Congress, Republicans could have difficulty securing sufficient votes to restore the area for potential leasing.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

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HF Sinclair to Settle New Mexico Refinery's Emission Violations: DOJ — OPIS

Dow Jones Newswires

HF Sinclair will pay a $35 million civil penalty and implement compliance measures at an estimated $137 million to resolve alleged violations of Clean Air Act and state laws at its 124,000 b/d Navajo oil refinery in Artesia, N.M., the Department of Justice said Friday.

Under the proposed settlement with DOJ, EPA and the New Mexico Environment Department, HF Sinclair must pay the $35 million in equal shares to the U.S. and New Mexico, the statement said.

HF Sinclair must operate 10 real-time air pollution monitors along the refinery fence line and one real-time air pollution monitor and six other passive monitors in the town of Artesia to measure refinery air pollution emissions and make the results available on a public website, according to the statement.

The company's failure to monitor and control the release of benzene, a known carcinogen, and other hazardous and toxic air pollutants including volatile organic compounds posed a significant threat and potential health risks to the nearby community, the statement said.

"We have taken appropriate actions, including investing in capital projects and implementing enhanced monitoring, and will continue to do so to meet our compliance obligations," Corinn Smith, an HF Sinclair spokeswoman, said in a statement.

According to DOJ, HF Sinclair has agreed to address its failure to comply with regulations over refinery equipment and operations, including flaring, fenceline monitoring of benzene emissions, wastewater, storage vessels, heat exchanger leaks and leak detection and repair.

DOJ said measures to be taken by HF Sinclair include installing a flare gas recovery system that will reduce VOC, SO2, NOx and greenhouse gas emissions and implementing investments and upgrades to equipment to reduce benzene in wastewater streams.

The proposed consent decree was filed with the U.S District Court for the District of New Mexico and is subject to a 30-day comment period.

HF Sinclair's Artesia refinery is capable of processing renewable feedstocks like animal fats and distillers corn oil to produce renewable diesel.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

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Ioneer Closes $966 Million DOE Loan for Lithium-Boron Project

Dow Jones Newswires

By Katherine Hamilton

Ioneer closed a $996 million loan from the Energy Department for its facility at its Rhyolite Ridge lithium-boron project in Esmeralda County, Nev.

The Reno, Nev.-based lithium-boron producer said it expects the financing to develop on-site processing at the facility. Once operational, Rhyolite Ridge is expected to quadruple U.S. domestic lithium supply and power about 379,000 electric vehicles a year.

The loan, which is due in 20 years, has a $968 million principal and $28 million in capitalized interest. It is a $268 million increase in loan principal from a conditional loan commitment made in 2023.

Construction is targeted in 2025, with first production scheduled for 2028, Ioneer said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

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Nymex Platinum, Palladium Warehouse Stocks - Jan 17

Dow Jones Newswires

Source: CME Group 
 
For previous business day 
PREV TOTAL subject to revisions. Source: CME Group 
 
                      Prev                         Net               Total 
Platinum             Total  Received Withdrawn  Change Adjustment    Today 
ASAHI DEPOSITORY LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
BRINK'S, INC. 
Registered         100,254         0        0       0         0    100,254 
Eligible            27,297    27,440        0  27,440         0     54,737 
Total              127,551    27,440        0  27,440         0    154,991 
 
CNT DEPOSITORY, INC. 
Registered           1,246         0        0       0         0      1,246 
Eligible                 0         0        0       0         0          0 
Total                1,246         0        0       0         0      1,246 
 
DELAWARE DEPOSITORY 
Registered           4,373         0        0       0         0      4,373 
Eligible            20,946         0        0       0         0     20,946 
Total               25,319         0        0       0         0     25,319 
 
HSBC BANK, USA 
Registered           1,442         0        0       0         0      1,442 
Eligible             1,904         0        0       0         0      1,904 
Total                3,347         0        0       0         0      3,347 
 
INTERNATIONAL DEPOSITORY SERVICES OF DELAWARE 
Registered           3,845         0        0       0         0      3,845 
Eligible                 0         0        0       0         0          0 
Total                3,845         0        0       0         0      3,845 
 
JP MORGAN CHASE BANK NA 
Registered          76,222         0        0       0         0     76,222 
Eligible             1,144         0        0       0         0      1,144 
Total               77,366         0        0       0         0     77,366 
 
LOOMIS INTERNATIONAL (US) LLC 
Registered           5,970         0        0       0         0      5,970 
Eligible             3,318         0    2,251  -2,251         0      1,067 
Total                9,289         0    2,251  -2,251         0      7,038 
 
MALCA-AMIT USA, LLC 
Registered             592         0        0       0         0        592 
Eligible                 0         0        0       0         0          0 
Total                  592         0        0       0         0        592 
 
MANFRA, TORDELLA & BROOKES, INC. 
Registered           5,845         0        0       0         0      5,845 
Eligible            13,872         0        0       0         0     13,872 
Total               19,717         0        0       0         0     19,717 
 
COMBINED TOTALS 
Registered         199,790         0        0       0         0    199,790 
Eligible            68,482    27,440    2,251  25,189         0     93,671 
Total              268,271    27,440    2,251  25,189         0    293,460 
 
                      Prev                         Net               Total 
Palladium            Total  Received Withdrawn  Change Adjustment    Today 
ASAHI DEPOSITORY LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
BRINK'S, INC. 
Registered           1,690         0        0       0         0      1,690 
Eligible             3,008         0        0       0         0      3,008 
Total                4,698         0        0       0         0      4,698 
 
CNT DEPOSITORY, INC. 
Registered              97         0        0       0         0         97 
Eligible                 0         0        0       0         0          0 
Total                   97         0        0       0         0         97 
 
DELAWARE DEPOSITORY 
Registered             887         0        0       0         0        887 
Eligible             3,108         0        0       0         0      3,108 
Total                3,994         0        0       0         0      3,994 
 
HSBC BANK, USA 
Registered             586         0        0       0         0        586 
Eligible             2,623         0        0       0         0      2,623 
Total                3,209         0        0       0         0      3,209 
 
INTERNATIONAL DEPOSITORY SERVICES OF DELAWARE 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
JP MORGAN CHASE BANK NA 
Registered          12,746         0        0       0         0     12,746 
Eligible               728         0        0       0         0        728 
Total               13,474         0        0       0         0     13,474 
 
LOOMIS INTERNATIONAL (US) LLC 
Registered          10,011         0        0       0         0     10,011 
Eligible               301         0        0       0         0        301 
Total               10,312         0        0       0         0     10,312 
 
MALCA-AMIT USA, LLC 
Registered               0         0        0       0         0          0 
Eligible                 0         0        0       0         0          0 
Total                    0         0        0       0         0          0 
 
MANFRA, TORDELLA & BROOKES, INC. 
Registered           2,116         0        0       0         0      2,116 
Eligible               630         0        0       0         0        630 
Total                2,746         0        0       0         0      2,746 
 
COMBINED TOTALS 
Registered          28,133         0        0       0         0     28,133 
Eligible            10,398         0        0       0         0     10,398 
Total               38,531         0        0       0         0     38,531 
 
Write to Rodney Christian at csstat@dowjones.com

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Ioneer Closes $966M DOE Loan for Lithium-Boron Project

Dow Jones Newswires

By Katherine Hamilton

Ioneer closed a $996 million loan from the Energy Department for its facility at its Rhyolite Ridge lithium-boron project in Esmeralda County, Nev.

Construction is targeted in 2025, with first production scheduled for 2028, Ioneer said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

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Soybeans Futures Rise Amid U.S.-China Trade Optimism and Argentine Weather Concerns

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