It's hard to find a better time for an energy company to go public. Crude is $112 (U.S.) a barrel and newly public firms such as MEG Energy and Tourmaline Oil Corp. have been on fire.
Against that backdrop, Gibson Energy Inc. has taken the plunge and launched an initial public offering that could come in around $500-million (Canadian), according to people close to the deal. If that size holds, it would be the biggest IPO so far this year in Canada
Yet Gibson isn't an energy producer like MEG and Tourmaline. The company, which has been around for more than 50 years, specializes in energy services and is involved in everything from truck and pipeline transportation to refining to processing and drilling fluids. In other words, it's a one-stop shop for many oil and gas producers.
Gibson's offering will be for treasury shares, which means that the current owner, private-equity player Riverstone, won't be selling its position. However, the over-allotment option has been structured such that its shares will come out of Riverstone's stake. In fact, the structure is similar to that of MEG's IPO, in which majority owner Warburg Pincus still wanted to keep its stake in the business.
Calgary-based Gibson is going public following some transformational acquisitions in 2010. Last year the company bought Taylor Cos. LLC, which expanded Gibson's geographic reach into some major U.S. oil and gas regions and also purchased the 75 per cent stake of Battle River Terminal ULC it didn't already own.
Gibson has also signed some big contracts for pipeline and tank construction in the recent past, like its deal with Suncor Energy to build and operate four 300,000-barrel tanks at its Hardisty terminal. Combined, the agreements total 1.2 million barrels of tankage.
Financially, Gibson posted revenue in 2010 totalling $3.7-billion, and earnings before interest, taxes, depreciation and amortization of $180-million.
BMO is the offering's lead dealer, sharing the top line with Scotia Capital and J.P. Morgan. It's a big win for BMO, and another sign of the bank's energy strength, considering BMO was also a co-lead manager in MEG's IPO.