Fort Worth oil and gas magnate Bob Simpson’s MorningStar oil and gas company has announced it is going public as “TXO Energy” in a proposed $100 million initial public offering (IPO).
TXO filed on November 17, declining to list a date for its IPO and stating its offering will come “as soon as practicable.” The energy firm did not reveal the offering’s total number or target price of shares. It plans to register on the New York Stock Exchange under the ticker symbol “TXO.”
According to its filing, TXO is focused on conventional oil, natural gas, and natural gas liquid reserves found in the Permian and San Juan Basins in the southwestern regions of the country. The company aims to deliver investors quarterly dividend payouts of all available cash (minus funds set aside for reserves). TXO intends to increase these payouts over time as it becomes more profitable, the filing said.
According to its recent earnings reports, TXO’s balance sheets remain in the black. For the first three quarters of 2022, it generated over $200 million in net revenue, with $15 million in profits.
Simpson, who will serve as chief executive officer, chairman and director for TXO, founded MorningStar in June 2012 and has served as a director and the chairman of the board of the company since its founding. He was CEO of XTO Energy, a company he founded, until 2008 and served as chairman until 2010 when XTO merged with Exxon for $41 billion in one of the largest transactions in history for an independent oil and gas company.
Simpson served as chairman and a director of Southland from February 2015 until January 2020. Since August 2010 and until September of 2020, Mr. Simpson served as co-chairman of the Texas Rangers baseball team and since September of 2020 has served as chair of the executive committee. Simpson attended Baylor University, where he earned a bachelor’s degree in accounting and an MBA.
TXO is among a number of energy companies that are raising capital on the markets as the year closes. Bounty Minerals (BNTY), which taps natural gas in the Appalachian Basin, filed for a $100 million IPO on November 9, while BKV, another gas producer drilling in Forth Worth and Appalachian Basins, also filed for a similarly-sized offering on November 18.
Energy stocks have outperformed the broader market this year, offering investors some shelter from 2022’s bearish storm. The S&P 500, which tracks 500 leading companies on U.S. markets, is down roughly 17% year-to-date. By contrast, the S&P 500 Energy, which only covers energy companies in the S&P 500, is up around 65% over the same period.
As energy’s candle has continued burning amid the market gloom, some of the sector’s IPOs have been a bright spot on investors’ portfolios. Excelerate Energy, remains just north of its initial price from its April 12 IPO price, while ProFrac Holding is up 40% from its May 12 offering.
With seasoned leadership, proven profitability, and sensible balance sheets, TXO could prove a popular choice among dividend investors who remain bullish on the energy sector.
This article was produced and syndicated by Wealth of Geeks, distributed by the Associated Press and includes information from the TXO’s IPO filing with the U.S. Securities and Exchange Commission.