US Vine Energy to Go Public
Plano-based Vine Energy, a producer working in the Haynesville shale, reported on March 9 it had launched an initial public offering (IPO).
The company has offered 18.75mn shares at $17.50 each, it said in a filing with the US Securities and Exchange Commission. It plans to list on the New York Stock Exchange under the ticker symbol VEI. Citigroup, Credit Suisse, Morgan Stanley, Barclays, BofA Securities and RBC Capital Markets are acting as joint book-running managers for the proposed offering.
Vine intends to use the funds raised to pay down debt and finance new drilling. Making its case to investors, the company said it expected gas demand to increase across North America, particularly in the market for LNG exports.
“We believe the Haynesville will be particularly critical to meeting future natural gas demand,” it said in its filing.
The US Energy Information Administration (EIA) in its latest short-term market report said it expected total US natural gas consumption to decline by about 0.9% this year, largely because of higher commodity prices. Industrial use, however, is expected to increase on the back of the economic recovery – a recovery that is facilitated by increased vaccine rollouts and a new $1.9 trillion stimulus package.
The Haynesville shale basin sits predominately on the northern border of Louisiana. One of the more prolific gas reservoirs in the country, the EIA predicts Haynesville production in March will reach about 11.65bn ft3/day (330mn m3/d), an increase of about 0.8% from the previous month.
Vine first entered the Haynesville shale in 2014 after acquiring acreage from Shell and holds roughly 125,000 surface acres in its current portfolio. The company said it expects to see a 31% rate of return assuming NYMEX gas prices at $2.75/mn Btu. NYMEX gas traded early on March 15 at $2.53/mn Btu.
“Utilising an average of four gross rigs, which we believe is sufficient to maintain production, we have approximately 25 years of development opportunities,” the company stated.