Investors looking to pump more oil and gas profits into their energy portfolio have a new home-grown deal to weigh up.
Oklahoma City-based Mach Natural Resources has disclosed pricing terms for its imminent initial public offering (IPO) through an S-1/A filing with the Securities and Exchange Commission (SEC).
Mach will float 10 million common units at a price ranging between $19.00 and $21.00. If priced at the mid-point, the deal should raise a total of $200 million.
The firm already filed its S-1 for its IPO in September after confidentially registering for the launch on June 28, 2023. Mach intends to list on the New York Stock Exchange (NYSE) under the ticker “MNR.”
Stifel and Raymond James are the joint book-running managers for the deal, while Janney Montgomery Scott, Stephens Inc., and Johnson Rice & Company will act as co-managers.
Mach operates in the Anadarko Basin as an upstream oil and gas exploration company. The basin – the fifth largest such basin in the country – straddles Western Oklahoma, Southern Kansas, and northern Texas. Mach has a license to drill over roughly 936,000 acres across the area.
Anadarko houses numerous untapped reservoirs, which some experts say hold another 50 billion barrels of oil equivalent (boe). Its stupendous depth has earned it the moniker “super-super basin” in the drilling industry media.
Mach is profitable and has maintained solid margins in recent business quarters. It pumped $893.07 million in revenue from the 12 months ending on June 30 this year, extracting $463.71 million in profits. Over this period, Mach produced, on average, 65,000 BOE daily.
As for the dividend policy, Mach plans to pay out all available cash each quarter. However, distribution may restricted due to credit agreements and other policies.
Energy Market Mayhem
The outlook for the global economy looks increasingly dire as inflationary and deflationary forces play havoc with the U.S. and China. The stakes are high: monetary or fiscal policy missteps by Washington or Beijing could trigger a deep recession in either of the world’s two largest economies, sapping global demand for hydrocarbons.
Meanwhile, geopolitical tensions from both the war in Ukraine and renewed conflict in the Middle East threaten further instability. The aftermath of Russia’s invasion saw energy markets in havoc last year, particularly natural gas. Now, with rival petrostates Iran and Saudi Arabia pondering their strategic response to the fighting in Israel, the potential for state actors to weaponize the oil trade looms large.
The ongoing efforts by governments and corporations to transition to renewable energy sources to achieve net-zero carbon emissions by 2050 also complicates the outlook for hydrocarbons.
Investors will need to weigh up their outlook for the energy market over the medium to long term and keep an eye on the forces reshaping geopolitics and the global economy to best assess whether Mach will perform well in their portfolio.