QEP Resources Inc.QEP , a leading independent energy company, announced the pricing of 33,000,000 shares of its common stock which is being offered to the public. It is to be noted that the number has been upsized from 30,000,000 shares of its common stock. Following the announcement of stock offering, QEP Resources slipped more than 9% on the NYSE.
The company has priced the stock offering − anticipated to close on Mar 3, 2016 − at $10.00 per share. Investors should know that the underwriters have been given a 30-day option by the company to purchase up to 4,950,000 additional shares of the common stock. From the offering, QEP Resources will likely generate gross proceeds of $330 million. But the amount is expected to rise to $379.5 million if the option is exercised by the underwriters.
QEP Resources will utilize the net proceeds for reducing debt, financing part of its upstream operations and to purchase assets. The amount will also be allocated toward working capital needs.
Like QEP Resources, Marathon Oil Corp MRO also declared the pricing of its upsized equity offering. Other energy players that also opted for equity offerings last month include Devon Energy Corporation DVN and Enbridge Inc. ENB . We can say that with these stock offering measures, the firms are planning to strengthen their financials amid persistently low commodity prices.
Denver, CO-based QEP Resources is engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. We like the company's diversified reserve base in multiple U.S. basins, as well as its focused investment in high-return areas such as the Pinedale, Uinta, Bakken and Permian.
However, with crude prices witnessing a freefall since Jun 2014, QEP Resources has been able to extract less value for its products.
As a result, QEP Resources carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.