Calfrac Well Services Ltd. surged after the Texas investment firm Wilks Brothers LLC boosted its stake in the fracking company in a bet on a rebound in Canada's beaten down oil patch.
Calfrac’s shares have risen more than 40 percent since a low on June 26, despite lagging commodity prices.
Closely-held Wilks Brothers disclosed after markets closed on Thursday that it holds about 16.4 million shares in Calfrac after raising its stake to 12 percent from 10 percent. That would make the firm the second-largest shareholder behind Matco Investments, according to data compiled by Bloomberg.
Wilks Brothers is also the top holder of Calgary-based Trican Well Service Ltd. with about a 7.3 percent stake, according to the data.
Dan and Farris Wilks live in Cisco, west of Fort Worth, and owe their fortune to Frac-Tech Holdings, which they founded and built into one of the largest fracking companies in North America, helping oil and gas companies crack underground shale formations. They sold a majority interest in the firm to a group of investors including Singapore state-owned Temasek Holdings in 2011 for billions of dollars.
The firm is now known as FTS International and based in downtown Fort Worth.
“Much like the company's involvement in Trican, we wouldn't expect the Wilks Brothers to push towards trying to take an active role in managing the company and believe the investment will likely be fairly passive in nature,” Jon Morrison, an oil services analyst at CIBC Capital Markets, said in a note to clients. CIBC has a neutral rating for Calfrac shares.
A spokesman for Wilks Brothers declined to comment.
The majority of Canadian oil-service companies are trading at “very reasonable multiples,” Michael Mazar, an analyst at BMO Capital Markets, said in a note. Mazar sees investors focusing on any forward outlooks and messaging heading into next year.