Jagged Peak Energy: Were Hopes Too High?
Jagged Peak Energy Inc. is an oil and gas company which focuses on the extraction of these resources from the Southern Delaware base in Texas. It develops these unconventional oil and gas reserves then seeks to make profits from the sale of the oil. The company was founded in April 2013 by a team of managers in conjunction with Quantum Energy Partners, an energy private equity firm. Current Key executives include Mr. Joseph N. Jaggers III who is the company’s Chairman, CEO, and President, Gregory S. Hinds who is the company’s Executive Vice President in charge of Development, Planning and Acquisitions and Mark R. Petry who acts as Executive Vice President of land.
The company had its initial offering on January 27th this year. It debuted at $15 per share, which was $1 below the expected price range of $16 to $18 a share. The company sold a total of an estimated 31.2 million shares which raised a revenue of $494 million. This was $208 million shy of the revenue the firm would have obtained had investors agreed to buy their shares at the price of $18. Further, the company had planned on selling 38.2 million shares, again falling short of its target. Of the stock it sold, approximately 12 million shares were sold by company insiders. This figure represented 31 percent of the shares being offered in the release.
Joint book-running managers for the company’s release were Citigroup, Credit Suisse, J.P. Morgan, Goldman, Sachs & Co., RBC Capital Markets and Wells Fargo Securities. Senior co-managers included UBS Investment Bank and KeyBank Capital Markets. Co-managers for the firm included ABN AMRO, Fifth Third Securities, Petrie Partners Securities, Tudor, Pickering, Holt & Co., BMO Capital Markets, Deutsche Bank Securities, Evercore ISI and Scotia Howard Weil.
After a disappointing premiere in its offering, Jagged Peak Energy appeared on trading floors on January 28th under the ticker JAG. Against all the odds, the company’s stock price dropped yet again, dropping as low as $13.83 a share. However, the share price soon recovered, and the company’s stock closed that day’s trading standing at the cost of $14.50 per share.
The company, in its registration statement, had explained to potential investors that the revenue it would obtain during its release would be used to repay a debt of $132 million. Further, it had said the rest of the revenue would be put into a drilling program the firm was beginning in the Southern Delaware Basin. However, after failing to meet its intended IPO pricing and a rather fluctuating run in the market so far, things may not be as rosy as they seem for the company.
Jagged Peak Energy’s release had hoped to have a similar trajectory as that of Centennial Resource Development, another company that operates in the Permian Basin. Centennial Resource Development has had its stock rise by 85 percent since its debut in the markets. However, the start does not seem to be as encouraging.
Despite this, the company has top-tier real estate under its management and therefore has the potential to come up from its recently consistent drops in pricing.