NEW YORK (TheStreet) -- Shares of Resolute Energy (REN) were surging 14.33% to $29.36 on heavy trading volume mid-Wednesday afternoon after the oil and gas company said it would acquire assets in the Delaware Basin from privately-owned Firewheel Energy for $135 million.
Resolute will buy 3,293 net acres in the highly-productive basin from Firewheel, an energy company backed by private equity firm EnCap Investments. The properties produce around 1,200 barrels of oil equivalent daily.
About $90 million of the purchase price will be paid in cash and the remainder will be paid in shares of Denver-based Resolute.
Resolute will finance its cash portion of the deal through a private offering of 55,000 shares of a newly-created preferred class of stock.
The new series B preferred shares are priced at $1,000 per share and will pay an 8.125% dividend yield. The series B shares can be converted to common stock for $29.53 per share.
Following the announcement, Seaport Global started covering the stock with a "buy" rating and $45 price target, according to the Fly.
The firm said that Resolute shares are trading at a discount and it sees considerable upside to net asset value.
Additionally, Rodman & Renshaw initiated coverage of the stock with a "buy" rating and $32 price target today, the Fly reports.
More than 3.78 million shares of Resolute have traded so far today vs. the 30-day average volume of about 1.7 million shares.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "sell" with a ratings score of E+.
Among the areas we feel are negative, one of the most important has been weak operating cash flow.
You can view the full analysis from the report here: REN