Tue, Oct. 18, 3:49 PM
- SM Energy (SM +1.5%) surged to a 52-week high at the open before pulling back following news of its purchase of 35.7K acres in the Midland Basin in west Texas for $1.1B in cash and 13.4M shares valued at ~$500M.
- SM expects to use the proceeds from a $785M sale of property and other assets in the Williston Basin to Oasis Petroleum, also announced today, to pay for the bulk of its cash outlay for the deal.
- “Our Permian growth rate will be huge, higher than our more highly valued competitors,” SM CEO and President Jay Ottoson says without naming the competitors, but the company’s slide presentation lists Diamondback Energy (FANG -0.5%), Callon Petroleum (CPE -0.1%), Parsley Energy (PE -0.5%) and RSP Permian (RSPP -1.1%) as its top peers in the area.
- CapitalOne upgrades SM to Overweight from Equal Weight with a $50 price target, lifted from $46, as it estimates SM paid ~$42K/acre for the acreage when backing out 2.4M boe/day production from the total $1.6B purchase price.
- Williams Capital considers SM its top pick in the sector, saying the deal gives it "the scale to command an improved valuation and trade more like a Permian Basin company, especially when considering its execution of selling non-core assets."
Mon, Oct. 17, 3:52 PM
- Analysts are out defending RSP Permian's (RSPP -0.2%) $2.4B Silver Hill acquisition and its upsized 22M-share offering to help fund the deal, as several raise their stock price targets.
- Canaccord Genuity maintains its Buy rating for RSPP and raises its price target to $50 from $42, saying the deal bolsters the company's bull case going forward, despite paying what was on an acreage basis the highest price thus far in the Delaware Basin (~$45K/net acre); the firm says RSPP now enters one of the best parts of the basin accretively while maintaining a relatively clean balance sheet and improving its debt-adjusted cash flow growth trajectory.
- BMO maintains its Outperform rating and raises its target to $54, Raymond James reiterates its Strong Buy rating and hikes its price target to $53 from $50, and Wunderlich maintaines its Buy rating and ups its price target to $51 from $44.
Thu, Oct. 13, 4:47 PM
- RSP Permian (NYSE:RSPP) -5.8% AH after agreeing to acquire Silver Hill Energy Partners and Silver Hill E&P II for $1.25B in cash and 31M common shares of its common stock, implying a total purchase price of ~$2.4B.
- RSPP says the deal is a unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin with 41K net surface acres, which creates substantial scale with combined current production of ~50K boe/day, 100K-plus net surface acres, 500K-plus net effective horizontal acres, and 3,600 net drilling locations with substantial additional upside.
- To help fund the deal, RSPP launches a 20M-share public offering, with an underwriters option to purchase up to an additional 3M common shares.
- Silver Hill reportedly had attracted interest from the likes of Diamondback Energy (NASDAQ:FANG), Noble Energy (NYSE:NBL), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY).
Sep. 29, 2014, 12:26 PM
- Encana’s (ECA +2.3%) takeover of Athlon Energy (ATHL +24.6%) is good news for Diamondback Energy (FANG +2.3%) and Energen (EGN +2.2%), according to analysts at Sterne Agee.
- The acquisition implies a value of $98/share for FANG, Sterne says, based on FANG's 85K net acre leasehold position, estimated 19.8K boe/day of Q3 production, $585M of assumed debt, and a $1.7B market value for the Viper Energy Partners (NASDAQ:VNOM) units it owns.
- The firm sees even more upside for EGN, as ECA’s price implies a value of $102/share for EGN, based on 180K net acres across both sides of the Permian Basin, 48K boe/day of Q3 Permian Basin production, 132M cfe/day of Q3 San Juan Basin, and $835M of pro forma net debt as of Sept. 30.
- Permian producers Laredo Petroleum (LPI +5%), Parsley Energy (PE +5%) and RSP Permian (RSPP +4.8%) also are higher following the acquisition news.