Proskauer IPO Database
2016: Seven IPOs (10% of 2016)
2015: Seven IPOs (8% of 2015)
2014: 16 IPOs (13% of 2014)
2013: Three IPOs (3% of 2013)
Total: 33 E&P IPOs

The E&P sector IPOs analyzed in this year’s study included two oil & gas exploration and development companies, two oil & gas field equipment and services companies, two utility and energy companies and a pipeline MLP. Oil prices also rebounded in 2016. WTI Crude started the year around $30/barrel and ended the year above $50/barrel.

Tilt towards larger deals – More than half of E&P IPOs had a base deal above $250 million with almost half in the $250 million to $500 million range. In addition, the average base deal for E&P issuers at pricing was $283 million, which ranks third among the other sectors in our study. Notwithstanding base deal size, almost all of the E&P issuers were EGCs.

Greatest use of pro formas – For the second year in a row, E&P issuers included pro forma financial statements more than any other sector. Generally, the primary driver of these pro forma financial statements was the contribution or acquisition of oil and gas properties or other significant assets to and by the issuer. Other adjustments that were given effect in the pro forma financial statements included reorganizations, the issuance and sale of equity or debt securities and other financings.

Two years of Financial Statements and Selected Financial Statements – All of the E&P issuers that were EGCs in our study this year included two years of audited financial statements and two years of selected financial statements. This compares to 70% for all other EGCs that included two years of audited financial statements and 53% for all other EGCs that included two years of selected financial statements.

Against the backdrop of larger deals this may seem counterintuitive. One explanation may be that some of these issuers are generally relatively new entities formed for the purpose of holding assets as public entities.

Significant use of Non-GAAP Measures – Most E&P issuers utilized Adjusted EBITDA or EBITDAX compared to less than half of other issuers in our overall study.

Unpredictable Pricing and Performance – While E&P IPOs were slightly more likely to price above the range than IPOs in other sectors, they were also more likely to price below the range. In addition, E&P issuers had the lowest percentage of over-allotment option exercise and also had relatively weak aftermarket performance compared to other sectors.

Low Insider Purchasing – One of seven (13%) E&P issuers disclosed insiders purchasing, compared to 45% for all other issuers.

Return to Sponsor-backed IPOs – After no sponsor-backed IPOs in 2015, 57% of E&P IPOs in 2016 were sponsor-backed.

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