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Sundance Energy Australia Ltd. (Pending:SNDE), an onshore oil and gas E&P firm with principal offices in Denver, Colorado, plans to raise $135.6 million in its upcoming United States IPO. The firm plans to offer 7.8 million shares at an expected price range of $16.50-$17.50 per share. If the IPO can find the midpoint of that range at $17 per share, SNDE will command a market value of $542 million.

SNDE filed on December 19, 2013.
Lead Underwriters: Canaccord Genuity Inc., UBS Investment Bank, Wells Fargo Securities LLC
Underwriters: Scotia Capital Markets, Simmons and Co. International

Summary

SNDE is an oil and natural gas firm exploring, developing, and producing North American resource plays. The firm's operations are focused in the south Texas Eagle Ford formation, the Mississippian and Woodford formations in north-central Oklahoma, the Codell and Niobrara formations in central Colorado, and the Bakken and Three Forks formations in northwest North Dakota. See figure below, with gray-shaded areas covering SNDE operations.

(click to enlarge)

(Source: www.sundanceenergy.com.au/operations.cfm)

SNDE's average daily production rate, net of royalties, for the month of September 2013, was approximately 3,855 Boe/d - approximately 80% of which was oil. As of June 30, 2013, the firm's estimated proved reserves were 14.3 MMBoe. SNDE plans to develop assets where it is the operator and has high working interests, which would allow it to more easily control the pace of development and allocation of capital resources.

Valuation

SNDE offers the following figures in its F-1 balance sheet for the nine months ending September 30, 2013:

Revenue: $55,163,000.00
Net Income: $3,627,000.00
Total Assets: $560,413,000.00
Total Liabilities: $225,583,000.00
Stockholders' Equity: $334,830,000.00

SNDE's oil revenue increased by $45.6 million to $79.4 million - a 135% increase - for calendar 2013 over calendar 2012. Over the same periods, natural gas revenue increased by $4.0 million to $6.0 million.

Industry Competition

Oil and natural gas are extremely competitive industries; SNDE competes with public integrated and independent oil and gas companies, private equity-backed and private operators for properties, equipment, and personnel. Some of these firms have significantly greater financial resources than SNDE. Competitors include Anadarko Petroleum Corporation (NYSE:APC), Chesapeake Energy Corporation (NYSE:CHK), Shell, and ConocoPhillips (NYSE:COP).

Management

CEO and Managing Director Eric P. McCrady has served as CEO since April 2011 and managing director of the board of directors since November 2011. He previously served as SNDE's chief financial officer. Mr. McCrady has also worked in various financial and executive positions for The Broe Group and in various corporate finance roles for American Coin Merchandising, Inc. He holds a degree in Business Administration from the University of Colorado Boulder.

Conclusion
We rate SNDE as neutral to buy for aggressive investors who want more oil exposure.

The firm has achieved profitability and has seen rapidly expanding oil production and revenues in the past year. SNDE also boasts an impressively experienced leadership team, with executives that have spent decades in the energy sector.

The firm should be able to continue its strong growth in coming years even in the face of stiff competition.

Source: Sundance Energy Hopes For A Glowing IPO