Mach Natural Resources LP (MNR), an Oklahoma City-based oil and natural gas partnership, priced its IPO at $19.00 – the low end of its $19.00-to-$21.00 range – on Tuesday night (Oct. 24, 2023). The profitable oil and gas drilling company priced 10 million units – the same number in the prospectus – at $19.00 to raise $190 million. Mach plans to use most of the IPO proceeds to pay down debt.
Shares of Mach Natural Resources LP opened flat at $19.00 today (Wednesday, Oct. 25, 2023) on the New York Stock Exchange. The stock rose to a session high of $19.20 and then slid to $18.81 at around 11:30 a.m. EDT on volume of about 900,000 shares.
Mach shares closed at $18.34, down 66 cents or off 3.47 percent in their first day of NYSE trading on volume of about 2.13 million shares.
Stifel and Raymond James were the joint book-runners of the IPO.
Mach Natural Resources LP is the second oil and gas limited partnership to go public this year. TXO Energy Partners L.P. (TXO) went public in late January at $20.00 on 5.0 million units – half the size of Mach’s IPO. TXO Energy Partners’ stock rose $2.00 – or 10 percent – in its opening trade on the NYSE and at the close on Jan. 27, its first day of trading. The same joint book-runners – albeit with Raymond James in the “lead left” spot and Stifel in the second position – were in charge of the TXO Energy Partners’ IPO. The company, which changed its name to TXO Partners L.P. in May, pays a quarterly dividend.
Mach says that it intends to pay a dividend – also known as a cash distribution. Mach estimates that dividend at $3.52 annualized per unit for the four quarters that will end on June 30, 2024, according to the prospectus.
Mach Natural Resources LP is focused on acquiring, developing and producing crude oil, natural gas and NGL reserves in the Anadarko Basin in Western Oklahoma, Southern Kansas and the Texas Panhandle. Formed in 2017, the company has an acreage position of about 936,000 net acres (99 percent held by production) and over 2,000 horizontal drilling locations, with more than 750 of those in the Oswego formation, a prolific reservoir in north central Oklahoma, the prospectus says.
Mach is backed by Bayou City Energy (BCE), a Houston private equity firm that specializes in oil and gas exploration and production.
Tom L. Ward is Mach’s CEO. He served as the chairman and CEO of SandRidge Energy (SD) from 2006 to 2013 and Tapstone Energy from 2013 to 2017, according to the prospectus. Ward was the president of Chesapeake Energy Corp. (CHK), a fracking pioneer, from the time he co-founded the company in 1989 until February 2006.
Mach said it would use about $111.3 million – or most of the net IPO proceeds – to pay off debt from three BCE-Mach credit facility agreements, according to the prospectus.
Nearly $70 million in IPO proceeds will be used to buy 3.75 million common units from the existing common unit owners on a pro rata basis, according to the prospectus.
A new credit facility in the range of $150 million to $200 million is being negotiated with lenders, the prospectus says. The new credit facility will be secured by essentially all of Mach’s assets. The company says it expects to use borrowings under the new credit facility “to repay in full and terminate the BCE-Mach III credit facility.”
For the 12 months that ended on June 30, 2023, Mach Natural Resources LP earned net income of $463.71 million on revenue of $893.07 million. (This financial profile uses historical figures in the prospectus; pro forma figures are typically higher.)
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