New York, NY-based Warren Resources Inc. ( WRES ) announced the closure of its $300 million aggregate principal amount of 9% senior notes due 2022 at a price of 98.617% of par, in a private placement.
The energy explorer used the net proceeds from this offering to part finance the $312.5 million cash portion for its recently concluded assets acquisition in Pennsylvania's Marcellus Shale - from Colorado-based oil and natural gas producer, Citrus Energy Corp. and two other parties that owned working interest in the region - for $352.5 million.
Warren Resources, which went public in 2004, is a publicly traded exploration and production company 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 liquids-rich acreage of the Wilmington field in the Los Angeles Basin in California and natural gas production in the Washakie Basin in Wyoming.
With a proven exploration strategy, a track record of growing production and a robust hedging program that minimizes commodity price exposure, Warren resources is primed for attractive returns. Moreover, the company's balanced asset portfolio, together with a business model focused on operational efficiencies and attractive acquisitions/growth projects, makes the oil and gas finder a good choice for investors looking for substantial value.
However, as is the case with other exploration and production firms, Warren Resources' 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, Warren Resources 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 months.
However, some better-ranked domestic upstream energy stocks include RSP Permian Inc. ( RSPP ), Cheniere Energy Inc. ( LNG ) and Clayton Williams Energy Inc. ( CWEI ). All the firms hold a Zacks Rank #1 (Strong Buy).