In an uncertain Energy Industry, E&P PetroShare refiles for Public Trading
Back in 2015 PetroShare Corp. (PRHR) launched into the public market, raising $4.6 million in the OTCQB. PetroShare stock was still doing well when the company filed to list on the New York Stock Exchange under the same label in 2016. The company later withdrew its filing. PetroShare has ironically listed to start trading again in June this year, months into an oil glut and with oil prices unstable.
PetroShare is an E&P that was formed in 2012 to deal in both oil and natural gas. Based in Englewood, CO, PetroShare operates in the Rocky Mountains. Most of the company’s wells are located in the Denver-Julesburg Basin.
Earlier on analysts indicated that they thought PetroShare was a strong contender in the market for various reasons. One reason was that PetroShare is in a unique position to produce vast amounts of oil for years to come. With that kind of resource at hand, the company could bring in revenues in the millions over the next few years. That was a good sign to investors.
By the time the company filed to list last year, it shares on the OTCQB were up 60% percent from their first trading price. PetroShare additionally commanded a $5 million line of credit that would have funded any expansion plans that the firm had at the time. Oil prices were soaring, and the market was ready to take part in the offering. PetroShare indulged this interest with a $28 million deal that would have brought the company’s market value to $74 million. Later PetroShare withdrew the offering and investors went looking elsewhere to put their money.
On Friday PetroShare announced that it was refiling to list on the NYSE much to the surprise of investors. Oil company IPOs at the moment are not hitting it off because of the oil glut. There’s an upside to it, however. The current US administration is a little friendlier to E&Ps, so pricing now might be a good decision. If the company sells all the shares it is offering in this issuance, it will make approximately $50 million in IPO proceeds. According to company CEO Stephen Foley, the market is in PetroShare’s favor.
Foley stated in 2016 that PetroShare intended to maximize its potential. The company had been expected to have attained maturity by 2018. One way that PetroShare had intended to achieve this was by expanding. “We intend to acquire more acreage and begin our drilling program,” Foley had remarked. Within two months of making that statement, PetroShare lived up to the promise by acquiring producing wells in Adams County. The wells increased the company’s valuation tremendously and strengthened its growth potential.
PetroShare also made another strategic move that has boosted its chances of success in the upcoming IPO. Towards the end of last year, the firm brokered a partnership agreement with Providence Energy Operators LLC. The deal between the two companies reduces the risk of ownership of PetroShare stock because of its stipulations. Under the agreement, Providence has an obligation to cover 50% of all costs that PetroShare incurs in searching for and dredging up oil. With more wells in its portfolio and more high-yield low-risk returns, PetroShare has a lot to offer investors.