Investors looking to siphon more oil and gas profits into their brokerage accounts have a new deal to size up.
Mach Natural Resources filed an S-1 form for an initial public offering (IPO) with the Securities and Exchange Commission on September 22. Mach intends to list on the New York Stock Exchange (NYSE) under the ticker “MNR.”
The Oklahoma City-based energy firm did not disclose terms for the deal, neither revealing the number of shares it would offer nor an estimated price range. The deal’s value is currently at the placeholder sum of $100 million.
Mach produces oil, natural gas, and natural gas liquids (NGL) hydrocarbons across Western Oklahoma, Southern Kansas, and northern Texas. As an upstream oil and gas exploration firm, Mach has a license to drill over roughly 936,000 acres stretching across the Anadarko Basin in the U.S. – the fifth largest such basin in the country.
Anadarko is exceptionally deep and has numerous untapped reservoirs, which has caused some in the media to name it a “super-super basin.”
“The Anadarko Basin still has a lot of hydrocarbons remaining. With better commodity prices, another 50 billion barrels of oil equivalent (BOE) could be discovered over time with horizontal drilling plus new conventional opportunities,” consultant and geoscientist Rick Fritz told an industry publication in 2020.
Mach is profitable and boasts solid margins in recent quarters. It pumped $893.07 million in revenue from the last 12 months ending on June 30 this year, from which it extracted a total of $463.71 million in profits. Over this period, Mach produced, on average, 65,000 BOE per day.
Dividend investors will be pleased to know Mach intends to make quarterly distributions. However, because it will issue all available cash each quarter (“without reserving cash for future distributions or borrowing to pay distributions during periods of low revenue”), shareholders’ income will fluctuate along with its current cash flow. Mach notes that dividend payments may also be subject to various restrictions from agreements with its creditors.
Energy in Flux
The hydrocarbon market is in a prolonged state of flux as the macroeconomic conditions, geopolitical conflict, and an ongoing transition to cleaner energy sources reshape the global energy map.
Oil prices have surged in recent months as Saudi Arabia has colluded with Russia to tighten supply. WTI Crude is currently trading at around the $90 mark, with some experts predicting it will run to $100.
Meanwhile, LNG, which took center stage during 2022’s global energy crisis, continues to shift rapidly as supply lines are rerouted amid the ongoing war in Ukraine. According to Shell’s LNG outlook for 2023, the global LNG market will remain tight through the mid-2020s as Europe and Asia compete for limited new LNG supply. The U.S. became the world’s largest gas producer last year, a title it has retained this year.
While the hydrocarbon supply is tight, there is no shortage of oil and LNG investing products. Yet separating the wheat from the chaff to identify which belongs in a portfolio remains a challenge.
Investors will need to weigh up their outlook for hydrocarbon demand over the coming years, the macroeconomic conditions of the global economy amid current high inflation, and whether Mach can beat out rival drillers in Anadarko．