The Oil and gas midstream services unit of Diamondback, Rattler Midstream LP (RTLR) of Midland Texas launched it’s IPO worth $665M with 38 million shares at $17.50 eachat the midpoint of the proposed range of $16.00 to $19.00.
The Oil and gas midstream services unit of Diamondback, Rattler Midstream LP (RTLR) of Midland Texas launched it’s IPO worth $665M with 38 million shares at $17.50 eachat the midpoint of the proposed range of $16.00 to $19.00.
Rattler Midstream LP (RTLR) raised $665 million in the biggest energy initial public offering of the year, pricing an increased number of shares in the middle of its targeted range. RTLR sold 38 million shares at $17.50 each, according to a statement Wednesday. The company had marketed 33 million shares for $16 to $19 apiece.at the midpoint of the proposed range of $16.00 to $19.00 would command a market value of $2.7 billion.
Rattler Midstream was formed in July 2018 by Midland, Texas-based Diamondback to own, operate, develop and acquire midstream infrastructure assets in the Midland and Delaware sub-basins of the Permian Basin, where oil and gas production has soared.
On Debut RTLR shares opened at $18.06 in New York, 3.2% above their IPO price. The stock traded up up to a high of $19.27 and closed at $19.24 +1.74 (9.94%).
Diamondback had initially planned for its Rattler Midstream subsidiary to make its public debut last year. However, despite filing the regulatory documents to take Rattler public in early August 2018, energy IPOs came to a full stop in the second half of last year thanks to commodity volatility, particularly in crude oil markets.
The Midland, TX-based company plans to list on the Nasdaq under the symbol RTLR. All proceeds from the offering will be distributed back to Diamondback, which he expects will be used to pay down a portion of the borrowings drawn on the company’s revolver.
Credit Suisse, BofA Merrill Lynch, J.P. Morgan, Barclays, Citi, Goldman Sachs and Wells Fargo are the joint bookrunners on the deal.
The common units being offered represent an approximate 22% limited partner interest in Rattler (or an approximate 25% limited partner interest if the underwriters exercise in full their option to purchase additional common units). Diamondback and its subsidiaries will own the remaining approximate 78% limited partner interest in Rattler (or approximate 75% limited partner interest if the underwriters exercise in full their option to purchase additional common units) and the general partner of Rattler.
As of March 31, Rattler Midstream holds 781 miles of pipeline with roughly 232,000 barrels per day (bbl/d) of crude oil gathering capacity, 2.720 million bbl/d of permitted saltwater disposal capacity, 575,000 bbl/d of freshwater gathering capacity, 80 million cubic feet per day (MMcf/d) of natural gas compression capability and 150 MMcf/d of natural gas gathering capacity, according to filings with the U.S. Securities and Exchange Commission.
Additionally, Rattler Midstream owns equity interests in two long-haul crude oil pipeline—EPIC Crude Oil Pipeline and the Gray Oak Pipeline—which, upon completion, will run from the Permian Basin to the Texas Gulf Coast.
Diamondback Q1 Earnings and Asset Sales
Diamondback during its first-quarter earnings announcement on May 7, also revealed the sale of noncore assets with proceeds planned to reduce debt and fund a $2 billion share buyback program. The noncore asset sales include 103,423 net acres in the Central Basin Platform, Eastern Shelf and the Northwest Shelf the company acquired in the Energen acquisition. Diamondback is also selling 6,589 net acres in the Southern Midland Basin in Crockett and Reagan counties, Texas.
The assets being sold have estimated net production of about 6,500 barrels of oil equivalent per day for the full year 2019 from over 3,000 producing wells, according to a company press release. Diamondback’s adjusted net income of $229 million for the first quarter was up year-over-year from $162 million a year ago.
$FANG reported earnings of $1.39 for the first quarter beating the Street consensus of $1.36. Pro forma for the asset sale and Rattler Midstream IPO, Sorbara estimates Diamondback would have total liquidity on a standalone basis of roughly $1.3 billion, comprised of $116 million cash on hand and $1.2 billion available under its $2.5 billion borrowing base.
Source: Diamondback
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