Ten U.S. energy and utility companies have either completed or filed for initial public offerings on the U.S. stock market this year, and if all current listing plans pan out, 2023 could see the highest number of energy IPOs since 2017, per data from Renaissance Capital cited by the Financial Times.
Higher oil and gas prices over the past year and the relatively steady prices in recent months have encouraged more U.S. energy firms to seek monetization via share offerings. More companies are now able to access the IPO market, and there could be further uptick in activity later this year, bankers told FT.
The first energy IPO of the year already took place. At the end of January, TXO Energy Partners (NYSE: TXO) listed on the U.S. market for the first energy IPO in more than six months. TXO Energy Partners is a master limited partnership whose current acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.
Renewable energy companies are also considering IPOs as investors expect the U.S. Inflation Reduction Act (IRA) to accelerate growth in the sector.
The IRA has nearly $370 billion in climate and clean energy provisions, including investment and production credits for solar, wind, storage, critical minerals, funding for energy research, and credits for clean energy technology manufacturing such as wind turbines and solar panels.
Israel-based Enlight Renewable Energy, which is listed in Tel Aviv, earlier this month raised more than $250 million by offering 14 million shares and started trading on the Nasdaq Global Select Market.
Solar technology company Nextracker priced last week its IPO above the initially announced range, expecting to receive net proceeds of $693.8 million from the offering.
Still, the interest rate hike path of the Fed could be the big unknown for energy IPOs in the coming months, capital market lawyers told Texas Lawyer.
"How much will we see in 2023? The key to that answer is the Fed," David Oelman, a capital markets partner at Vinson & Elkins in Houston said.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More