NEW YORK (TheStreet) -- Shares of Energen Corp (EGN) were sliding, lower by 4.34% to $70.51 on heavy volume in late morning trading Wednesday, after the company filed to sell shares of common stock and a Citigroup downgrade.
The company announced that it has priced an underwritten public offering of 5.7 million shares of its common stock. Total gross proceeds of the offering will be roughly $405 million.
The underwriter has a 30-day option to buy an additional 855,000 shares from Energen.
The company expects the offering to close on or about June 22.
Energen intends to use the net proceeds from the offering to pay for a slight increase in drilling activity in the Midland Basin in the second half of 2015 and a multi-year acceleration of development activities in the Permian Basin in 2016.
Credit Suisse is acting as sole book-running manager for the offering.
Also, analysts at Citigroup downgraded shares of Energen to "neutral" from "buy" this morning.
The firm cut its price target to $78 from $80, saying near-term upside looks priced in at current valuation levels.
About 2.55 million shares have changed hands as of 11:19 a.m. ET today, compared to its average trading volume of about 900,118 shares a day.
Birmingham, Ala.-based Energen is an oil and gas exploration and production company with about 1.1 billion barrels of oil-equivalent proved, probable and possible reserves.
It also has 2.2 billion barrels of oil-equivalent contingent resources.
Separately, TheStreet Ratings team rates ENERGEN CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENERGEN CORP (EGN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
- 36.30% is the gross profit margin for ENERGEN CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EGN's net profit margin of -8.20% significantly underperformed when compared to the industry average.
- ENERGEN CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ENERGEN CORP reported lower earnings of $1.36 versus $1.95 in the prior year. For the next year, the market is expecting a contraction of 41.5% in earnings ($0.80 versus $1.36).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 128.9% when compared to the same quarter one year ago, falling from $53.32 million to -$15.42 million.
- You can view the full analysis from the report here: EGN Ratings Report