TXO Partners, L.P. Announces Pricing of Upsized Public Offering

Rhea-AI Summary

TXO Partners, L.P. (NYSE: TXO) has priced its upsized public offering of 6,500,000 common units at $20.00 per unit, raising approximately $122.5 million in net proceeds. The offering size increased from the initially planned 5,000,000 units. Underwriters have an option to purchase an additional 975,000 units. The proceeds are intended to fund part of the cash consideration for acquisitions from Eagle Mountain Energy Partners and a private company. If the acquisitions are not completed, the funds will be used to repay outstanding borrowings and for general partnership purposes. The offering is set to close on June 28, 2024, subject to customary conditions.

Positive

• TXO is raising approximately $122.5 million in net proceeds from the public offering.
• The offering size increased from 5,000,000 to 6,500,000 units, indicating strong investor demand.
• Proceeds will fund acquisitions, potentially driving future growth.
• Raymond James is acting as the sole book-running manager, providing significant underwriting support.

Negative

• The public offering will dilute current shareholders' equity.
• There is a risk that acquisitions may not be completed, potentially altering the use of proceeds.

Insights

Financial Analyst

TXO Partners is undertaking a significant action by increasing its public offering from 5,000,000 to 6,500,000 common units at $20.00 per unit. This move signals a strong demand for their shares, as the offering size increase typically reflects investor confidence. The net proceeds of approximately $122.5 million show a substantial influx of capital, which TXO plans to use for strategic acquisitions and potentially to pay off outstanding debt.

The timing and success of this offering are crucial. The use of proceeds for acquisitions from Eagle Mountain Energy Partners and another private company could significantly enhance their asset base and operational capacity. However, the offering is not contingent on these acquisitions, suggesting flexibility in handling the funds if the deals do not materialize.

From a retail investor perspective, this offering might appear as a positive strategic move. However, potential dilution from the issuance of new units and the dependency on successful acquisitions pose risks. The market reaction to this offering will likely hinge on how the new capital is deployed and the performance of the acquired assets.

Market Research Analyst

The strategy behind TXO Partners' public offering can be viewed through the lens of market positioning and competitive dynamics. With the energy sector experiencing fluctuations, raising substantial capital can provide TXO with the leverage to seize growth opportunities. The increase in the offering size indicates robust investor appetite, reflecting confidence in the company's prospects.

The intended use of proceeds aligns with industry trends where companies are consolidating to build larger, more resilient portfolios. Nevertheless, the fact that the offering is not contingent on the acquisitions may introduce some uncertainty. Investors should monitor the progress of these acquisitions closely. If the acquisitions do fall through, repayment of debt is a prudent use of the capital, but it won't provide the same growth trajectory as successful acquisitions.

Understanding the broader market condition, a key insight is the potential impact on TXO's unit price. Short-term market reaction might be positive given the increased offering size and strategic intent. Long-term, the successful integration of new assets will be critical in delivering value to investors.

FORT WORTH, Texas--(BUSINESS WIRE)-- TXO Partners, L.P. (NYSE: TXO) (“TXO”) today announced the pricing of its public offering of 6,500,000 common units representing limited partner interests in TXO (the “common units”) at price to the public of $20.00 per common unit. The offering size was increased from the previously announced offering size of 5,000,000 common units. TXO has granted the underwriters an option to purchase up to an additional 975,000 common units at the public offering price, less underwriting discounts and commissions. The offering is expected to close on June 28, 2024, subject to customary closing conditions.

TXO expects to receive net proceeds of approximately $122.5 million, after deducting underwriting discounts and commissions and estimated offering expenses and excluding any exercise of the underwriters’ option to purchase additional common units. 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/20240626707365/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 TXO Partners' public offering?

TXO Partners is offering 6,500,000 common units at $20.00 per unit.

How much does TXO Partners expect to raise from the public offering?

TXO Partners expects to raise approximately $122.5 million in net proceeds.

When will the TXO Partners public offering close?

The offering is expected to close on June 28, 2024, subject to customary closing conditions.

What will TXO Partners use the proceeds from the offering for?

The proceeds will fund a portion of the cash consideration for acquisitions from Eagle Mountain Energy Partners and a private company; if the acquisitions are not completed, the funds will repay borrowings and for general partnership purposes.

Who is the sole book-running manager for the TXO Partners offering?

Raymond James is acting as the sole book-running manager for the offering.