NEW YORK ( TheStreet -- Private equity firms have a reputation, just or not, for unloading investments on the public in hyped-up IPOs but that doesn't look like the case when it comes to Laredo Petroleum (LPI).
The company, which is 93%-owned by Warburg Pincus, is seeking to raise $332.5 million through the sale of 17.5 million shares at $18-$20 each. The deal is one of the few PE-backed energy plays that Francis Gaskins, the president of IPO Desktop, likes.
Laredo is an independent energy company based primarily in the Permian Basis in West Texas and the Anadarko Granite Wash in the Panhandle in Texas and Western Oklahoma.
Revenue more than doubled to $371.3 million for the nine months ended Sept. 30 from $157.1 million in the year-ago equivalent period, while net income jumped to $104 million from $51.2 million.More tellingly, the shareholders are only selling 14% of the stock in the offering. The proceeds will be mainly used to pay down its credit line. Laredo has drilled more than 660 vertical wells, but the real growth looks to be in the horizontal program. The increase in horizontal drilling may add significant production and reserves. Another relatively large offering is Bonanza Creek Energy (BCEI) and IPO Desktop's Gaskins says he's taking a pass on it. Based in Denver, Bonanza Creek is seeking to raise $300 million through the sale of 14.3 million shares at between $20-$22 each. Canadian firms West Face Capital and Alberta Investment Management own 40% of Bonanza Creek after investing $265 million. Bonanza Creek doesn't plan on paying dividends. The company has been aggressively acquiring acreage in Colorado, targeting the Niobrara formation -- one of the most active oil shale plays in the United States. The company's goal though is to increase production from proven inventory as well as accretive acquisitions. Gaskins doesn't believe the company will be doing much exploring and thinks Laredo looks better for energy investors. Another energy play pricing this week is Houston-based Sanchez Energy (SN), which is seeking to raise $250 million through the sale of 10 million shares at between $24-$26 each. Gaskins also advises that investors pass on Sanchez Energy, saying it's priced too high at 62X forward earnings and 3.5x book value. Still, the company has shown signs of turning things around this year, reporting net income of $3.4 million on revenue of $9.9 million for the nine months ended in September, a vast improvement from its loss of $3.1 million on revenue of $1.5 million in the same period the previous year. Sanchez Energy plans to use the proceeds for drilling and exploration and for payments to owners such as SEP I and Marquis LLC.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV