For investors seeking out more fixed-income sources from energy stocks, a new natural gas play is coming to market.
Atlas Energy Solutions made a filing with the Securities and Exchange Commission (SEC) on January 31. The mining services firm did not disclose the number of shares it planned to offer or their proposed price. Its filing fee schedule shows the typical placeholder sum of $100 million, though some analysts see the deal raising double that figure, according to IPO Scoop.
It did not announce a date for the launch in the submitted paperwork but plans to list on the New York Stock Exchange (NYSE) under the ticker “AESI.” Goldman Sachs, Band of America Securities, and Piper Sandler are the offer's lead book-runners.
The Austin-based company filed confidentially with the SEC in February last year, as reported in a Reuters exclusive in April. The news agency cited sources at the time which estimated the deal could take the company's valuation to between $2 billion and $3 billion (including debt).
Atlas Energy Solutions operates across the Permian Basin of West Texas and New Mexico, the most active oil and natural gas basin in North America. The firm supplies miners with proppant and provides other logistical needs. Proppant, or fracking sand, holds open cracks in underground rock formations while oil and natural gas are extracted. Atlas Energy Solutions is currently trying to reduce the truck volume on public roads by developing an overland conveyor system in the area. Dubbed the “Dune Express,” the 42-mile-long moving belt will innovate last-mile logistics by efficiently transporting proppant to drilling sites, the company claims.
The firm is profitable and has paid $70 million in cash distributions to its private shareholders since 2021. It has signaled its intention to “regularly return capital to our stockholders in the future.” It did not give details in its prospectus, stating that any dividend policy and framework would be at the discretion of the board of directors.
Atlas Energy generated nearly $149 million in net gains from $386 million in revenue over the 12 months that ended September 30, last year.
This coincided with a boom in energy demand. Drilling levels, which cooled considerably during the pandemic, picked up dramatically last year after Russia's invasion of Ukraine triggered a global energy crisis. The firm reminded investors of the “cyclical nature of our customers' businesses and on the oil and natural gas industry,” listing it as chief among its risk factors.
Energy fared far better than other sectors during last year's bear market. The S&P 500's energy sector outperformed the overall S&P 500 index by 58% in 2022, making it the benchmark's only winning segment for the time period.
Energy's momentum converted into a strong showing of offerings from the sector amid a meager turnout for IPOs last year. Several energy firms managed to go public as the year drew to a close. Bounty Minerals (BNTY), which mines natural gas in the Appalachian Basin, filed for a $100 million IPO on November 9, while BKV Industries Limited (BKV), another gas producer drilling in Forth Worth and Appalachian Basins, filed for a similarly-sized deal on November 18.
This year could be another bumper year, with U.S. gas output expected to rise to 100 billion cubic feet per day (bcfd) in 2023, up 2% from last year, according to U.S. energy data. Nonetheless, growth will likely be stunted by infrastructure constraints, according to Reuters, as the new pipelines and export terminals needed to satisfy soaring gas demand in overseas markets remain under construction.
This article was produced and syndicated by Wealth of Geeks.