Terryville Mineral & Royalty Partners LP, an MLP formed by Memorial Resource to oil and gas production assets in North Louisiana, filed on Tuesday with the SEC to raise up to $150 million in an initial public offering.
Business
The company's initial assets consist of overriding royalty interests in nearly 27,000 gross acres in the Terryville Complex within the Cotton Valley formation of North Louisiana operated by Memorial Resource Development (MRD). Terryville Mineral & Royalty has an initial royalty interest of 7% of gross revenue from 44 of Memorial Resource's existing horizontal wells and all future wells completed by its parent within the acreage. Parent Memorial Resource, an oil and gas E&P backed by Natural Gas Partners, has gained 40% since its June 2014 IPO.
Distributions
The IPO candidate generated $22 million in historical royalty revenue and $19 million in cash available for distribution for the twelve months ended June 30, 2014. The company did not disclose a targeted minimum quarterly distribution per unit.
Financials
For the six months ended June 30, 2014, its revenue grew 180% to $15 million as parent Memorial Resource ramped up production and enjoyed higher average prices. During the period, revenue was derived 60% from natural gas, 22% from natural gas liquids and 18% from oil. As a vehicle collecting royalties, Terryville Mineral has few operating costs, and booked $14 million in EBITDA (97.3% EBITDA margin). Noting energy price volatility, Terryville Mineral & Royalty Partners LP intends to enter into commodity hedges covering 65% to 85% of estimated production.
Formed in 2014, the Houston, TX-based company plans to list on the NASDAQ under the symbol TRVL. Barclays is the sole bookrunner on the deal. No pricing terms were disclosed.
