QEP Resources Prices Stocks To Fund Permian Acquisition
Zacks Investment Research | Jun 21, 2016 10:15PM ET
QEP Resources Inc. (NYSE:QEP) , a leading independent energy company, announced the pricing of 20,000,000 shares of its common stock.
The company has priced the stock in a public offering, which is anticipated to close on Jun 27, 2016. Investors should note that the company has extended a 30-day option to underwriters to purchase up to 3,000,000 additional shares of the common stock. The offering will likely generate gross proceeds of $367 million for QEP Resources. Notably, the amount might rise to $422.1 million if the aforesaid option is exercised by the underwriters.
QEP Resources will utilize the net proceeds to partly fund its recently announced acquisition of oil and gas properties in the northern Midland Basin of the Permian Basin for an aggregate purchase price of approximately $600 million.
With the acquisition, the company will add over 430 potential horizontal drilling locations - that spread over 9,400 acres of land - with its existing core Permian Basin properties. The to-be acquired properties have a production capacity of about 1,400 barrels of oil equivalent per day and hold net proved reserves of approximately 76 million barrels of oil equivalent. The deal is slated to close in September but awaits customary closing conditions.
Also, the purchase is expected to help QEP Resources expand into areas where it can capitalize on its operating and technical expertise. In other way round, the to-be acquired resources along with existing assets will significantly improve the company’s future oil production growth prospects. However, if the acquisition is not completed, the net proceeds from the abovementioned offering will be utilized to reduce debt, finance part of the company’s upstream operations and to purchase assets. The remainder, if any, will be allocated for working capital needs.
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