Billionaire Texas Wilks Brothers Buy Up Canadian Fracking Shares

(Bloomberg) -- Calfrac Well Services Ltd. surged after 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 rose 4.5 percent at 1:20 p.m. in Toronto to its highest intraday since June 14, even as U.S. oil prices fell. The company’s shares have risen more than 40 percent since a low on June 26, despite lagging commodity prices.

Closely held Wilks Brothers said after market close on Thursday 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 Ltd., 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 rural Cisco, Texas, and owe their fortune to Frac-Tech Holdings LLC which they founded and built into one of the largest pressure pumping companies in North America. They sold a majority interest in the firm to a group of investors including Singapore state-owned Temasek Holdings Pte in 2011 for billions of dollars.

“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 Calfrac shares.

A spokesman for Wilks Brothers declined to comment on the holding.

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.

Calfrac reports earnings on July 26.

To contact the reporter on this story: Michael Bellusci in Toronto at mbellusci2@bloomberg.net.

To contact the editors responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net, Arie Shapira at ashapira3@bloomberg.net, Steven Frank