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-- Oil royalty trusts have been all the rage in new offerings, but the latest energy deals are calling themselves limited partnerships even though they look like royalty trusts.

Memorial Production



Rose Rock Midstream


, both expected to price this week, are seeking $200 million and $140 million respectively.

Houston-based Memorial Production is selling to sell 10 million shares with the expected price range between $19 and $21 each.

The company is a limited partnership formed by Memorial Resource to acquire oil and gas properties. Currently 81% of its reserves are from developed resources, which is usually code for mature properties and one of the reasons the company looks like a royalty trust.

Francis Gaskins, the president of the IPO Desktop, points out that Memorial Production has a reserve-to-production ratio of 17 years, another royalty trust-like quality.

Gaskins believes there are other better yielding options, especially from relatively new companies that came public earlier this year.

SandRidge Permian Trust

(PER) - Get Sandridge Permian Trust Report


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SandRidge Mississippian Trust

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Chesapeake Granite Wash

(CHKR) - Get Chesapeake Granite Wash Trust Report

are all yielding over 10%, whereas Memorial Production is planning on a 9.5% yield.


Rose Rock Midstream


is looking to sell 7 million shares for between $19 and $21 each as well.

The problem with Rose Rock is that a major shareholder has come out publicly against the offering. Rose Rock was formed by


(SEMG) - Get SemGroup Corporation Class A Report

and Sandell Asset Management, the SemGroup shareholder, believes the company should abandon the Rose Rock IPO and pursue a sale of the whole company through an auction process.

Sandell Asset believes the rejection of a bid from

Plains All American Pipeline

(PAA) - Get Plains All American Pipeline, L.P. Report

was correct because the price was too low, but the firm still thinks the board is not acting in the best interests of the shareholders by pursuing the Rose Rock deal.

Most of the proceeds from the Rose Rock offering will go to the parent SemGroup to repay debt. The projected yield of 7.25% for the shares is in the upper range of mid-stream limited partnerships.

Plains All American, for example, is yielding 6.14% and


(NS) - Get NuStar Energy L.P. Report

is paying 8.0%.

IPO Desktop's Gaskins is concerned Rose Rock's revenue declined during 2011 except for an uptick in September.

"There's too much hair in this offering," he says, advising investors to stay on the sidelines.


Written by Debra Borchardt in New York.

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Debra Borchardt


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