Oasis Petroleum Inc. advanced in its first day of trading after raising $588 million selling shares at the midpoint of its forecast price range in the second biggest U.S. initial public offering this year.
The Houston based drilling and exploration company with oilfields in North Dakota and Montana climbed 6 % to $14.84 at 2:29 p.m. in New York Stock Exchange trading.
Oasis Petroleum sold 42 million shares at $14 each, according to a statement yesterday.
The sale came after CBOE Holdings Inc. and BroadSoft Inc. priced offerings within their forecast range this week and the Standard & Poor’s 500 Index erased its loss for the year. At least 34 companies worldwide had postponed or withdrawn IPOs since the beginning of May as concern the European debt crisis would curb the global economic recovery sent the S&P 500 down as much as 14 % from its 2010 high.
“The market’s been at least stable, even had a pretty decent move up from its lows,” said Scott Billeadeau, who helps oversee $19 billion at Fifth Third Asset Management in Minneapolis and bought shares of CBOE. “And Oasis was unique. It’s oil exposed and has a seasoned management team.”
Morgan Stanley of New York and Zurich based UBS AG managed
Oasis Petroleum’s sale, which was the biggest U.S. deal of 2010 after Sensata Technologies Holding NV’s $654 million offering in March, data compiled by Bloomberg show. The company is backed by EnCap Investments LP, a Houston based private equity firm.
‘Unconventional’ Deposits
Oasis Petroleum focuses on developing and extracting “unconventional” oil and natural gas deposits, according to its filing with the Securities and Exchange Commission. It owns rights to 292,000 acres of land in North Dakota and Montana, 85% of which has not been developed, the filing showed.
The company plans to spend $220 million on drilling and supporting activities in 2010, more than double the $89 million in 2009.
Oasis Petroleum said it will use proceeds from the offering to fund its exploration program and repay debt.
The IPO came eight weeks after a rig leased by London based BP Plc exploded in the Gulf of Mexico, triggering the worst oil spill in U.S. history. President Barack Obama on May 27 extended a moratorium on deepwater offshore drilling permits and said yesterday that BP will put $20 billion into a compensation fund.
“What’s happening in the Gulf and the moratorium on offshore drilling, there’s going to be overhang with the deep sea drilling,” said Darren Fabric, managing director at Chicago based IPOX Capital Management LLC.
Relative Value
The IPO valued
Oasis Petroleum at 2.19 times net tangible book value, a measure of shareholder equity that excludes assets that can’t be sold in liquidation. That’s 53% higher than the median ratio of 1.43 for 61 oil refining and marketing companies worldwide, data compiled by Bloomberg show.
While
Oasis sold shares within its forecast range, Higher One Holdings Inc. cut the size of its IPO by 55 percent yesterday. Motricity Inc. reduced its deal by 40% today, a filing with the SEC showed. The Bellevue, Washington based company will now offer 5.9 million shares at $10 to $11 each.
“Capital markets are very tentative right now,” said Christopher Turner, head of capital markets at New York based private equity firm Warburg Pincus LLC, which oversees about $30 billion. “Windows are opening and shutting pretty rapidly based on idiosyncratic events and macroeconomic trends.”
Higher One, which processes financial aid payments and provides banking services to college students, raised $108 million yesterday after seeking $242.3 million, data compiled by Bloomberg and an SEC filing showed. The New Haven, Connecticut based company’s sale was managed by Goldman Sachs Group Inc.
The shares advanced 19% to $14.34 on the NYSE today.
Yale Students
Founded in 2000 by three students at Yale University, Higher One serves more than 650 campuses and about 4.6 million students. The company plans on using the proceeds from the sale to repay debt and fund general corporate expenses, develop new products and for possible acquisitions, its SEC filing showed.
About 88% of Higher One’s revenue in 2009 came from interchange fees, ATM fees, non-sufficient fund fees and other banking fees, according to the filing. The U.S. Senate passed a bill in May that would limit fees generated by debit cards.
“Investors were probably concerned with the pending changes in banking regulation that relates to debit card fees,” said Michael Gaiden, a Chicago based securities analyst at Morningstar Inc. “It’s easy to spook investors in an otherwise new story where there are a lot of unknowns, particularly with market conditions overall being tepid.”
CBOE, the last major U.S. securities exchange owned by its members, surged 12 percent on June 15 after the Chicagobased company completed its transformation into a public company with a $339 million IPO. Gaithersburg, Maryland based BroadSoft fell 7.8 percent yesterday after selling $67.5 million of shares.
Goldman Sachs led CBOE’s sale, while Goldman and Jefferies Group Inc. of New York managed BroadSoft’s IPO.
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