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Global Energy Advisory – 22nd June 2018

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Centennial Resource Files For IPO

Permian Basin

Centennial Resource Development out of Denver, Colorado, is pursuing a $100 million initial public offering (IPO). The company filed with the Security Exchange Commission on 22 June and will actually launch later in 2016.

Centennial is an independent company whose efforts center on the development of “unconventional” oil and gas reserves in the Delaware Basin, part of the Permian Basin. Centennial owns 61 horizontal rigs in the Basin.

In the filing, the company states that it believes the Delaware Basin to be one of the “most attractive operating areas in the United States.” According to a report by Bloomberg, the Delaware Basin is “yielding larger and larger oil discoveries.” Bloomberg also notes that horizontal drilling is allowing companies to access new parts of the Basin.

In the report to the SEC, Centennial says that it will use funds from the IPO to repay a $65 million term loan and other debts from its revolving credit facility. The company also plans to use revenue raised through the IPO to fund capital expenditures, and use a portion of it for “general corporate purposes.”

Related: New Drilling To Start As Oil Prices Firm Up

The company also states that Credit Suisse and Barclays are underwriters to the IPO. Centennial was founded in 2012 and had $81 billion in sales for the fiscal year ending on March 31 of this year. The Centennial filing marks the first time in over a year that an energy and production company in the United States has filed for an IPO.

It has been a rough year for oil prices, and many privately-backed energy companies have held off on public offerings. Other companies have gone bankrupt during the price slump. For the first quarter 2016, Centennial’s revenues were at $15.1 million. That is down significantly from the first quarter of 2015, when they were at $24.4 million.

By Lincoln Brown for Oilprice.com

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