Athlon Energy Prices Share Issue - Analyst Blog
April 17 2014 - 7:24PM
Zacks
Fort Worth, TX-based Athlon Energy Inc. (ATHL)
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.
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 include
Range Resources Corp. (RRC), Miller Energy
Resources Inc. (MILL) and Whiting Petroleum
Corp. (WLL). While Range Resources and Miller Energy
Resources hold a Zacks Rank #1 (Strong Buy), Whiting Petroleum
carries a Zacks Rank #2 (Buy).
ATHLON ENERGY (ATHL): Free Stock Analysis Report
MILLER ENERGY (MILL): Free Stock Analysis Report
WHITING PETROLM (WLL): Free Stock Analysis Report
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