Permian players are running hot after a third, strong IPO this year, and more may be in store.
Parsley Energy Inc . (NYSE: PE) is the company of the hour. After six years proving up and acquiring land in the Midland Basin, the company went public.
In part, the company planned to use proceeds from a stock offering to grab several thousand acres in the Permian.
The company’s success has been galvanizing and bodes well for “the wide swath of Permian players seeking additional investor funding to enact their development plans,” said Ethan Bellamy , a senior analyst at Baird Energy . “This is the third Permian-focused IPO this year, following RSP Permian Inc . (NYSE: RSPP) and EP Energy Corp . (NYSE: EPE).”
The company’s IPO made Bryan Sheffield , president, chairman and CEO, an instantly wealthy man. The company’s $18.50 per share offering was quickly eclipsed, and on June 4, traded at $24.94.
Sheffield grew up the son and grandson of oilmen in Midland, Texas, and moved north after college to seek riches in the Chicago options pits. After a few years clerking at the Chicago Mercantile Exchange and trading interest rates for First Continental Trading Inc ., Sheffield returned to Texas -- and found his fortune.
Since his oil and natural gas company sold shares in an IPO on May 22, the company has soared more than 29%, making the 36-year-old one of the youngest billionaires in the U.S., according to the Bloomberg Billionaires Index.
“Exciting times for Parsley Energy,” Sheffield said in an email.
The company has about 112,000 net acres and stakes in 555 wells in the Permian Basin, a large oil and gas deposit in north-central Texas, according to a company fact sheet. It had sales of $143 million in 2013, about 80% from oil.
Before its IPO, the company disclosed it had entered an April 10 agreement for an option to purchase 4,867 net acres, primarily in the company’s Midland Basin core area for $132.8 million. The company expects to exercise its option and planned to use net proceeds from its IPO to fund the purchase of the assets.
On May 1, 2014, the company also completed a purchase and sale transaction, acquiring 1,997 net acres in the Midland Basin core area. The assets include 6.3 net wells with average production, for the month ended April 30, of 861 net