Fort Worth, TX-based
Athlon Energy Inc.
) has priced an underwritten public offering of 12,875,000 common
shares - upsized from the original offering size of 11,000,000
shares - at $40.00 a piece, with a 30-day over-allotment option
for an additional 1,931,250 shares. The offering, which was
announced on Apr 15, is likely to close on Apr 23.
ATHLON ENERGY (ATHL): Free Stock Analysis
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The oil and liquids-rich natural gas explorer plans to use the
net proceeds from this offering, together with the amount
generated from a senior notes offering, to pay for the pending
acquisitions, as well as for corporate purposes.
Athlon Energy, which went public in Aug last year, is an
independent exploration and production company engaged in the
acquisition, finding, and development of unconventional onshore
oil and gas properties. The company's operations are concentrated
primarily in the Permian Basin in West Texas.
With holdings of around 100,000 net acres in the eastern portion
of the Permian Basin and approximately 30 years of vertical
drilling inventory, Athlon Energy's asset portfolio is primed for
high production growth and peer-leading returns.
Earlier this month, Athlon Energy agreed to acquire certain
producing and undeveloped properties spread over 23,500 net acres
in northern Midland basin from five different sellers for a
combined $873 million in cash.
The to-be-bought assets in the Texas counties Martin, Upton,
Andrews and Glasscock - adjacent to Athlon Energy's existing
fields in the region - holds an estimated 250 million
oil-equivalent barrels (MMBOE) in reserve potential and will add
4,800 BOE (67% oil) to the outfit's daily production. The
properties would also add 425 'highly prospective' horizontal
drilling locations to Athlon Energy's inventory.
However, as is the case with other independent exploration and
production companies, Athlon Energy's results are directly
exposed to oil and gas prices, which are inherently volatile and
subject to complex market forces. Realized prices could differ
significantly from our estimates, thereby affecting the company's
revenues, earnings and cash flow.
As a result, Athlon Energy currently retains a Zacks Rank #3
(Hold), implying that it is expected perform in line with the
broader U.S. equity market over the next one to three months.
However, some better-ranked domestic upstream energy stocks
Range Resources Corp.
Miller Energy Resources Inc.
Whiting Petroleum Corp.
). While Range Resources and Miller Energy Resources hold a Zacks
Rank #1 (Strong Buy), Whiting Petroleum carries a Zacks Rank #2