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Sand used during hydraulic fracturing. Source Energy is Canada’s largest distributor of fracking sand.

Jeff McIntosh/The Globe and Mail

Source Energy Services has raised $175-million in the first large initial public offering by a Canadian energy firm in two and half years.

Source, which produces sand used in hydraulic fracturing, sold its shares at $10.50 each, a price well below what the company and its private-equity owners had initially hoped.

The stock rose as much as two per cent in its Toronto Stock Exchange debut Thursday, but ended flat.

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The company, backed by TriWest Capital Partners, had originally hoped to raise as much as $300-million, selling shares at $17-$20 each, but conditions in the Canadian energy sector worsened during the first quarter of this year as oil prices weakened.

Source's offering, along with offerings from other companies, were put on hold.

STEP Energy Services Ltd., a fracking company owned by ARC Financial, delayed its IPO in March after reducing the target price range for its shares to $10-$12 from $14-$16.

The last major IPO in Canada's energy sector was that of Seven Generations Energy Ltd, which raised $932-million in October, 2014, just as oil prices were starting their rout.

Source, which operates a mine in Wisconsin, sold 16.7 million shares and underwriters have an overallotment option for another 2.5 million.

The syndicate is led by Bank of Nova Scotia, Morgan Stanley and Bank of Montreal.

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