Penn Virginia Resource Partners, L.P. (PVR) announced that it has fixed the price of an underwritten public offering of 7.0 million of its common units representing limited partner interests. The price per common unit is pegged at $24.55.
The partnership will allow the underwriters of the issue a window of 30 days to purchase up to 1.05 million additional common units to cover over-allotments, if necessary.
The proceeds from the issue are expected to be $164.6 million after deducting underwriting discounts and commissions and other related expenses. If the underwriters exercise their full option to purchase additional units, the net proceeds will climb to roughly $189.4 million.
As of September 30, 2011, the partnership had utilized $0.64 billion from its $1.0 billion revolving credit facility. The partnership intends to utilize the net proceeds of the issue, including proceeds from any exercise of the over-allotment option, to repay a portion of its borrowings outstanding under its revolving credit facility. In the past, in May 2008, the partnership issued common units and utilized the proceeds to replenish the amount drawn from its revolving credit facility.
The partnership expects to invest $180 million to $200 million in internal growth projects in 2011, which includes investments worth $120 million in the Marcellus Shale alone. We believe replenishing its revolving credit facility will enable the partnership to not only fund its internal growth projects but to move ahead with strategic acquisitions.
The unit holders continue to enjoy the benefits of a regular cash distribution by the partnership. On November 14, 2011 the partnership paid a quarterly distribution of 50 cents per unit. The new quarterly distribution represents a sequential growth of 2% and a year-over-year hike of 6.4%.
Earnings per unit of the partnership in the third quarter 2011 were lower than the Zacks Consensus Estimate. The Zacks Consensus Estimates for the fourth quarter and fiscal 2011 are currently 33 cents and $1.40, respectively.
Penn Virginia currently has a short-term Zacks #3 Rank, which translates into a Hold rating. The partnership competes with CONSOL Energy Inc. (CNX).
Radnor, Pennsylvania-based Penn Virginia Resource manages coal and natural resource properties as well as natural gas gathering and processing businesses. The partnership’s coal properties are located in Central and Northern Appalachia, Illinois Basin and San Juan Basin. The partnership owns and operates natural gas midstream assets located in Oklahoma and Texas.
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