Based in Fort Worth, TX, Energy & Exploration Partners (ENXP) scheduled a $237 million IPO with a market capitalization of $525 million at a price range mid-point of $15 for Wednesday, November 14, 2012.
Three other IPOs are scheduled for this week. The full IPO calendar is available here.
S-1 filed October 25, 2012.
Manager, Joint Managers: Canaccord Genuity; Johnson Rice & Company L.L.C.
Co Managers: Global Hunter Securities/ Stephens; Capital One Southcoast; Macquarie Capital; Wunderlich Securities; Knight; C. K. Cooper.
ENXP is buying leasehold acreage from Chesapeake Energy Corporation (NYSE:CHK) and is using an IPO to finance much of the purchase price.
|annualizing June 2012 9 mos|
|Energy & Exploration Partners (ENXP)|
OBSERVATIONS & CONCLUSION
A recent production and exploration company with some operations, Diamondback Energy (NASDAQ:FANG) priced its IPO at $17.50 October 12, 2012. FANG recently traded around $16.04, down 8.4% from its IPO price.
ENGP intends to sell 45% of itself on the IPO to finance its acquisitions. Well-run companies with good growth potential don't sell 45% of themselves on an IPO.
ENXP has no production history; pass on the ENXP IPO.
ENXP is an independent exploration and production company focused on the acquisition, exploration, development and exploitation of unconventional oil and natural gas resources.
After giving effect to the acquisition of acreage from Chesapeake Energy Corporation and the related conveyance of acreage described below, ENXP will own 84,989 net acres in three core areas: The Eagle Ford Shale and Woodbine Sandstone formations in East Texas, which we refer to as the Eaglebine; the Wolfcamp play in the Permian Basin in West Texas, which we refer to as the Wolfcamp; and the Niobrara Shale in the Denver-Julesburg Basin in Colorado and Wyoming, referred to as the Niobrara.
ENXP targets liquids-rich resource plays and has built its leasehold acreage position primarily through direct acquisitions from mineral owners.
ENXP has accumulated 13,935 net acres in its Eaglebine core area. ENXP has entered into two agreements with a subsidiary of Halcón Resources Corporation, or Halcón, and one agreement with a subsidiary of Constellation Energy Commodities Group related to the Eaglebine.
These agreements provide for ENXP's conveyance of operated working interests in some of ENXP's Eaglebine acreage and established two areas of mutual interest, referred to as AMI #1 and AMI #2.
ENXP has signed a purchase and sale agreement to acquire 57,275 net acres, eight producing wells and two non-producing wells in the Eaglebine (including 22,080 net acres in AMI #1 and AMI #2) from subsidiaries of Chesapeake Energy Corporation, or Chesapeake, for $126 million, subject to customary purchase price adjustments.
This transaction Chesapeake acquisition is expected to close in the fourth quarter of 2012
Halcón (NYSE:HK) elected to purchase its pro rata interest in the AMI #1 and AMI #2 acreage and AMI #2 wells ENXP will acquire in the Chesapeake acquisition. Accordingly, ENXP expects to convey to Halcón 16,529 net acres and an 80% working interest in two producing wells to be acquired in the Chesapeake acquisition for $53.1 million.
In addition to acreage in the Eaglebine, ENXP will have 13,377 net acres in its Wolfcamp area, where ENXP has 100% operated working interests, and 16,931 net acres in the Niobrara area, where ENXP generally has 100% operated working interests.
USE OF PROCEEDS
ENXP expects to net $207 million from its IPO of 15 million shares. Shareholders intend to sell 765,864 shares.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This ENXP IPO report is based on a reading and analysis of ENXP's S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.