A lot going on with APC. I've been unable to keep up with everything these past few weeks, IPO, Earnings, etc...
I couldn't comment on recent movements or daily swings.
Western Gas Partners Opens Flat, Trades Down Post-IPO
Last update: 5/9/2008 10:34:05 AM
By Lynn Cowan
Of DOW JONES NEWSWIRES
Energy company Western Gas Partners LP (WES) wrapped up a week of U.S. IPO activity on Friday with a cool reception from investors on its first day of trading. The company's stock opened at $16.50 on the New York Stock Exchange, flat with its initial public offering price, and was trading recently at the IPO price. The stock traded as high as $16.58 and as low as $16.18 earlier Friday morning. Western Gas sold 18.75 million limited partnership units at a price below its expected $17 to $19 range, which was set by underwriters UBS AG (UBS), Citigroup Inc. (C), Credit Suisse Group (CS) and Morgan Stanley (MS). Based in The Woodlands, Texas, Western Gas was formed by energy giant Anadarko Petroleum Corp. (APC) to own and operate some of Anadarko's midstream assets: six natural gas gathering systems, five treatment facilities and one interstate pipeline. Like other energy limited partnerships that have gone public in recent years, Western Gas isn't taxed at the corporate level and distributes all its available cash to shareholders; its initial minimum dividend target is at least $1.20 a share annually, or a 7% yield at the IPO price. As a limited partnership, Western Gas warns that it may have conflicts of interest with Anadarko, which can compete with the new company; shareholders in Western Gas have limited voting rights compared to those available to investors in ordinary corporations. Anadarko is the general partner in Western Gas and also owns 63% of its limited partnership interests. In 2007, Western Gas' total revenue rose 43% to $116 million and net income more than doubled to $24 million. The company credits rate increases and the acquisition of its pipeline for driving revenue and profits higher. Western Gas' debut wraps up a week of mixed performance from IPOs. Industrial pump and valve company Colfax Corp. (CFX) gained 17% on its first day of trading Thursday, while solar company Real Goods Solar Inc. (RSOL) declined 12% the same day. Western Gas is the third energy limited partnership to go public this year. Williams Pipeline Partners LP (WMZ), a pipeline partnership created by energy giant Williams Cos. (WMB), closed flat with its $20 IPO price during its January debut and was trading recently at $18.07 a share. Last week, Pioneer Southwest Energy Partners LP (PSE), created by Pioneer Natural Resources Co. (PXD), rose 3% on its debut, and was trading recently at $19.25, up from its $19 IPO price but below its $19.65 first-day close. Limited partnership stocks have had a spotty trading record in recent years; although the yields are attractive for some investors, the stock prices generally don't rise much. Midstream energy assets have been particularly popular targets for such partnerships because they don't actually own the commodities being handled and aren't directly exposed to the ups and downs of energy prices. Naturally, demand for natural gas does indirectly affect a midstream company like Western Gas; if prices decline, production could also fall and the company would see lower demand for its services. In its prospectus, Western Gas says it should grow organically as Anadarko's needs expand; it expects an increase in business from Anadarko based on planned drilling activity in the area where Western Gas operates, which includes Texas, the Rocky Mountains, and Kansas and Oklahoma. The company also wants to attract more non-Anadarko producers to use its services. |
