Memorial Production Partners L.P.
) has announced that the underwriters have exercised in full their
over-allotment option to purchase an additional 1,290,000 common
units of its previously declared public offering of 8,600,000
common units priced. The offering, announced on Jul 9, is expected
to close on Jul 15.
The energy explorer plans to use the proceeds from this offering -
approximately $222.5 million before the underwriting discount and
estimated offering expenses - to pay back part of the outstanding
borrowings under its revolving credit facility.
Memorial Production Partners, which went public in Dec 2011, is a
publicly traded exploration and production master limited
partnership (MLP) engaged in the acquisition, finding and
development of oil and gas properties in the U.S. The company's
operations are concentrated primarily in the East Texas / North
Louisiana, Rockies, Permian, Eagle Ford/South Texas and California.
Having done a stellar job at raising volumes and cash distribution,
analysts are predicting strong earnings growth for Memorial
Production Partners over the next couple of years. The 2014 Zacks
Consensus Estimate is $1.90, representing 23% earnings per share
growth over 2013. Next year's average forecast is $2.12,
corresponding with 12% growth. Moreover, Memorial Production
Partners continues to leverage its relationship with parent
Memorial Resource Development Corp.
) to make 'drop-down' transactions (or asset buys from the
partnership's sponsor company).
However, as is the case with other exploration and production
firms, Memorial Production Partners' 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, Memorial Production Partners currently retains a Zacks
Rank #3 (Hold), implying that it is expected to perform in line
with the broader U.S. equity market over the next one to three
However, some better-ranked domestic upstream energy stocks include
EXCO Resources Inc.
LRR Energy L.P.
). Both the firms hold a Zacks Rank #1 (Strong Buy).
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