Fort Worth-based oil and gas company MorningStar Partners LP, the company that arose after the sale of XTO Energy, is filing for a proposed $100 million initial public offering.
The company says it will be focused on acquiring, developing and producing oil and gas reserves, primarily in the Permian Basin of Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.
Bob Simpson started the company after the sale of his previous company, XTO Energy, to ExxonMobil for $41 billion in 2009. MorningStar Partners has kept a low profile even though it has a high-profile address: 400 W. Seventh St., the former Fort Worth Star-Telegram building.
Jay Young, CEO of King Operating Co. in Dallas, said Simpson’s timing is right.
“Not many people can build a company and sell it for $41 billion, but Bob can, so what he does is important,” he said. “He’s doing this at the right time because I believe the domestic oil and gas industry is going to have to start more drilling and exploration to meet our energy needs.”
Ray Perryman, president and CEO of The Perryman Group, an economic consulting group based in Waco, said taking the company public should provide greater access to expansion capital.
“Despite some of the current headwinds, I believe that the domestic oil and gas industry has a vital role to play in meeting future energy needs,” he said. .
MorningStar did not respond to requests for comments on the IPO filing at press time.
Simpson’s management team at MorningStar includes several former XTO Energy executives.
“We believe our management team has the experience, expertise and commitment to create significant value for our unitholders in the form of cash distributions combined with growth in revenues and production,” the company said in the IPO filing.
In the Nov. 16 filing, MorningStar said it plans to change its name to TXO Energy Partners ahead of the offering, a nod to Simpson’s previous firm. The company said it may also conduct a reverse stock split, which consolidates the number of existing shares of stock held by shareholders into fewer shares. The company said it hopes to list its shares on the NYSE under the symbol TXO.
According to the filing, as of the end of 2021, the company’s assets consisted of about 846,000 leasehold and mineral acres located primarily in the Permian and San Juan basins. The total estimated proved reserves were about 130 million barrels of oil equivalent per day, of which about 37% was oil.
In the first nine months of 2022, MorningStar said it produced an average of about 23,265 barrels of oil equivalent per day, about 70% of which came from assets operated by the company.
The company is profitable, according to the filing. For the nine-month period ended Sept. 30, the company had a net income of $15 million on revenue of $204 million. In 2021, the company reported $64.7 million in net income and revenue of $278.7 million.
The filing listed the company’s key members of the management team. Simpson is listed as CEO and chairman and director. Brent W. Clum is listed as president of business operations and chief financial officer and Keith A. Hutton is president of production and development. Like Simpson, Clum and Hutton were previously with XTO Energy.
Simpson’s previous company, XTO Energy, was one of the great Fort Worth energy success stories. It began in 1986 as Cross Timbers Oil Company with Simpson, Jon Brumley and Steve Palko. It eventually changed its name to XTO Energy, became a leader in the growth of shale energy and unconventional resource development. It grew to have 4,100 employees before Exxon made the acquisition in 2009. In . 2014, Exxon moved the subsidiary’s headquarters to Houston, selling several downtown buildings it owned in the process.
Next Steps:
After announcing its IPO, companies typically begin making presentations to potential investors. After the company and its underwriters judge the market and the reception from investors, they can decide when and whether to go public.
Along the way, XTO was known not only for producing good returns on its oil and gas acquisition and production, but also for purchasing historic buildings in Fort Worth and refurbishing them to use as the company’s offices. In 2007, Simpson was honored as a Restore America Hero award winner by the National Trust for Historic Preservation and HGTV.
Simpson began restoring buildings in the mid-1990s with the W.T. Waggoner building at 810 Houston St., where XTO was based. Other buildings that were renovated include the Bob R. Simpson Building at 110 W. Houston St., the Transport Life Building at 714 Main St., the Petroleum Building at 210 W. Sixth St., the Montgomery Ward/Tindall Storage building at 810 Grove St., the former Swift & Co. Building at 600 E. Exchange Ave. in the Stockyards and the Bennie G. Kniffen Building at 210 E. Seventh St. After leaving XTO following the sale, Simpson acquired the former Fort Worth Star-Telegram building at 400 W. Seventh St. and refurbished it for his new company’s headquarters.
Simpson is also a co-owner of the Texas Rangers baseball team, along with another Texas oil business leader, Ray Davis.
TXO isn’t the only oil and gas company locally to file for an IPO this year. In May, Willow Park-based ProFrac Holding Corp., a company that provides services to the oil and gas industry, including hydraulic fracturing, raised $288 million from the issue of 16 million new shares.
Oil services firms have benefited this year from oil price increases related to the Russian invasion of Ukraine.
Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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