Fort Worth-based oil and gas company MorningStar Partners LP, the company Bob Simpson founded following the sale of XTO Energy, detailed plans for a proposed $100 million initial public offering on Jan. 18.
MorningStar said in a news release it will rename the company TXO Energy Partners L.P., trade on the New York Stock Exchange under the “TXO” symbol and plans to offer five million common units at an estimated price range of $19 to $21 per share. If the units are sold at that price, TXO Energy will raise about $100 million. The company announced in November that it will focus 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.
Shareholders in the company include Global Endowment Management LP and Luther King Capital Management. Raymond James, Stifel, Janney Montgomery Scott and Capital One Securities are acting as underwriters for the offering, according to the filing with the Securities and Exchange Commission.
Simpson started MorningStar after the sale of his previous company, XTO Energy, to ExxonMobil for $41 billion in 2009. The company has maintained a low profile even though it has a high-profile address: 400 W. Seventh St., the former Fort Worth Star-Telegram building, next to the Fort Worth Club.
Simpson’s management team at MorningStar includes several former XTO Energy executives.
Few energy companies have gone public in the last few years even though the energy sector has produced strong results, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. Bullock said political uncertainty has made it difficult for traditional energy companies to raise funds.
But TXO’s reliable management team mitigates some of that uncertainty for investors, he said.
“That’s what investors would be looking for, a company with good leases, a solid management team and rising commodity prices,” Bullock said. “Bob Simpson and his team check all the right boxes.”
According to the November 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.
Bullock said he hopes TXO’s IPO is the start of a trend.
“It would be good for the industry if that’s the case,” he said.
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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