Sanchez Energy Corp (NYSE:SN) has disclosed plans to sell new shares of its common stock to raise funds for various needs that include working capital.
The company said it would sell 10 million shares through underwriters, which it will grant an option to purchase additional 1.5 million shares to cover overallotment. Sanchez hasn’t priced the offering, though its shares retreated 1.5% to close at $13.26 in the last session. Nevertheless, the stock is up more than 260% over the last 12 months.
“The offering will be made only by means of a preliminary prospectus supplement and the accompanying base prospectus,” the company said in a press release.
Sanchez has recently been active in the merger and acquisition market, tapping oil and gas assets at a time when oil prices are expected to continue rebounding after more than two years of a downturn. In a recent M&A move, Sanchez teamed up with Blackstone Energy Partners to purchase 155,000 acres from Anadarko Petroleum Corporation (NYSE:APC) in the Western Eagle Ford region for $2.3 billion.
The acquisition is expected to boost Sanchez’s production by 33,500 boepd.
Wall Street sentiment
Amid hopes for price recovery in the oil market and Sanchez’s efforts to strengthen its position in the energy sector through strategic acquisitions, Wall Street has recently grown more optimistic of the company’s prospects. Several equity rating firms have upgraded their sentiments on the stock so far this year.
Analysts at Northland Securities nearly doubled their price target on the stock of Sanchez to $20 from $11 and maintained Outperform rating on the stock. Earlier, analysts at Seaport Global upgraded their rating on Sanchez to BUY from NEUTRAL, while analysts at KLR Group upgraded the stock to BUY from HOLD.
4Q16 earnings report
Sanchez is scheduled to release 4Q16 earnings on February 23. The company last released earnings on November 7, when it reported 3Q16 EPS loss of $1.19 on revenue of $114.8 million. Both the top and bottom line metrics deteriorated from a year-ago, and also missed consensus estimates that called for EPS profit of $0.03 on revenue of $133.9 million.