TXO Partners, L.P. Announces Commencement of Underwritten Public Offering

Rhea-AI Summary

TXO Partners L.P. (NYSE: TXO) has commenced an underwritten public offering of 5,000,000 common units of partner interests, with a 30-day option for underwriters to purchase up to an additional 750,000 common units. The proceeds aim to fund part of the cash consideration for asset acquisitions from Eagle Mountain Energy Partners and a private company. If the acquisitions are not completed, proceeds will repay outstanding borrowings under TXO’s revolving credit facility and for general partnership purposes. Raymond James is the sole book-running manager for the offering, made pursuant to an effective shelf registration statement filed with the SEC.

Positive

• Commencement of a 5,000,000 common units public offering with an additional 750,000 units option.
• Proceeds will fund asset acquisitions or repay outstanding borrowings and for general partnership purposes.

Negative

• Potential shareholder dilution due to the issuance of 5,000,000 common units plus 750,000 additional units.

Insights

Financial Analyst

TXO Partners, L.P. has announced an underwritten public offering of 5,000,000 common units, with an option for underwriters to purchase an additional 750,000 units. This move is primarily to raise funds for upcoming asset acquisitions from Eagle Mountain Energy Partners and another private company. The fact that the offering is not conditioned on the consummation of these acquisitions illustrates risk management, as the proceeds will alternatively be used to repay debt and for general partnership purposes.

Impact on Stock: Such offerings often dilute existing shareholders' equity, which might result in a short-term dip in the stock price. However, the potential acquisitions could drive long-term growth if they lead to operational efficiencies and increased revenues. It's essential for investors to assess TXO's strategic rationale behind these acquisitions and their potential return on investment.

Market Dynamics: The timing of the offering, subject to market conditions, emphasizes TXO's reliance on favorable market sentiment. This strategy can maximize capital raised but also introduces uncertainty. A close watch on market reactions and the company's ability to execute post-acquisition integrations will be critical for investors.

In summary, this offering is a double-edged sword—potential dilution versus strategic growth. Investors should weigh the immediate effects of dilution against the long-term benefits of enhanced operational capabilities.

Market Research Analyst

The public offering by TXO Partners, L.P. underscores a strategic move to enhance their capital structure for potential growth through asset acquisitions. This is noteworthy given the energy sector's current climate, where consolidation and asset optimization are pivotal for competitiveness.

Industry Context: Acquiring assets from Eagle Mountain Energy Partners suggests a focus on expanding operational capacity or entering new sub-segments of the energy market. This can be significant, as energy companies are constantly seeking to optimize their portfolios to maintain profitability amid fluctuating commodity prices.

Investor Considerations: For retail investors, understanding the targeted acquisitions' quality and strategic fit within TXO’s existing portfolio is crucial. Additionally, the reliance on proceeds to repay outstanding borrowings introduces a safety net, which can be seen as a prudent financial strategy amid uncertain acquisition outcomes.

Ultimately, while the offering dilutes existing shares, the potential for strategic acquisitions and debt reduction presents a balanced approach. Investors should monitor further announcements regarding the acquisitions and analyze their anticipated returns.

FORT WORTH, Texas--(BUSINESS WIRE)-- TXO Partners, L.P. (NYSE: TXO) (“TXO”) today announced, subject to market and other conditions, the commencement of an underwritten public offering of 5,000,000 common units representing limited partner interests in TXO (the “common units”). TXO expects to grant the underwriters a 30 day option to purchase up to an additional 750,000 common units at the public offering price, less underwriting discounts and commissions. TXO intends to use the net proceeds from this offering, if consummated, to fund a portion of the cash consideration for the previously announced asset acquisitions from Eagle Mountain Energy Partners and a private company (the “Acquisitions”). The offering is not conditioned on the consummation of either of the Acquisitions. Pending the closing of the Acquisitions, and in the event that either of the Acquisitions are not completed, the proceeds from the offering will be used to repay the outstanding borrowings under TXO’s revolving credit facility and for general partnership purposes.

Raymond James is acting as the sole book-running manager for the offering. The offering is being made pursuant to an effective shelf registration statement, including a base prospectus, filed by TXO with the Securities and Exchange Commission (“SEC”). The offering of these securities may be made only by means of the prospectus supplement and the accompanying base prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. When available, a copy of the prospectus supplement may be obtained from any of the following sources:

Raymond James & Associates, Inc.

Attention: Syndicate

880 Carillon Parkway

St. Petersburg, Florida 33716

Telephone: (800) 248-8863

Email: prospectus@raymondjames.com

You may also obtain these documents for free when they are available by visiting EDGAR on the SEC website at www.sec.gov.

Important Information
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

About TXO Partners, L.P.
TXO Partners, L.P. is a master limited partnership focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. TXO’s current acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.

Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the words such as “possible,” “if,” “will” and “expect” and contain statements regarding the size, timing or results of the offering and the proposed Acquisitions. These forward-looking statements represent TXO’s expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved, and they are subject to risks, uncertainties and other factors, many of which are outside of TXO’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, TXO does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for TXO to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements discussed in "Risk Factors" in our prospectus supplement, the Registration Statement on Form S-3, our Annual Report on Form 10-K for the year ended December 31, 2023, our Quarterly Reports on Forms 10-Q filed with the U.S. Securities and Exchange Commission and our other filings with the SEC. These risks include, but are not limited to, our ability to consummate the proposed Acquisitions on the terms currently contemplated, the anticipated future performance of the combined company, risks and uncertainties related to economic, market or business conditions, and satisfaction of customary closing conditions related to the proposed offering and the proposed Acquisitions. The risk factors and other factors noted above could cause its actual results to differ materially from those contained in any forward-looking statement. You are cautioned not to place undue reliance on these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240625579611/en/

TXO Partners

Brent W. Clum

President, Business Operations & CFO

817.334.7800

ir@txopartners.com

Source: TXO Partners, L.P.

FAQ

What is the size of the public offering announced by TXO Partners?

The public offering announced by TXO Partners includes 5,000,000 common units with an option for underwriters to purchase an additional 750,000 units.

What are the intended uses of the proceeds from TXO Partners' public offering?

The proceeds will fund part of the cash consideration for asset acquisitions from Eagle Mountain Energy Partners and a private company, or repay outstanding borrowings and for general partnership purposes.

Who is managing the book-running for TXO Partners' public offering?

Raymond James is acting as the sole book-running manager for TXO Partners' public offering.

What could happen if TXO Partners' acquisitions are not completed?

If the acquisitions are not completed, the proceeds from the offering will be used to repay outstanding borrowings under TXO’s revolving credit facility and for general partnership purposes.