Strata X Energy (SXA) - Shale oil IPO

[Rodin]

Strata X Energy (SXA) is an upcoming IPO (ASX: SXA) which could be well worth watching when it lists in less than 2 weeks time on February 20.

http://www.strata-x.com/

SXA management has an excellent track record of creating substantial shareholder in their previous ventures (Arrow and Bow Energy, Senex/Royal Resources). The company has a diversified portfolio of shale oil and gas projects in some of the hottest areas at the moment (Eagle Ford, Texas; Canning Basin).

On listing, SXA will have a market cap and EV of about $38 million and $23 million respectively - IMO an undemanding valuation given the substantial acreage position in prospective basins and high growth potential of each project.

A number of wells are planned between listing and June including initial proof of concept vertical/horizontal/multi frac wells at the Maverick Project, Eagle Ford and Vail Project, Illinois Basin. This means plenty of activity and hopefully positive newsflow over coming months.

Below is a link to an initial research report on SXA which highlights the potential short to medium upside possible for SXA from its IPO price of 30 cents...

"Strachan Corporate assesses a risk adjusted after tax target value of $217 million or $1.16 per share, but over time any of its four main projects holds potential for a 5 to 10 fold value expansion with success."

http://strachancorporate.com.au/wp-content/uploads/2013/01/Strata-X-Strachan-Corporate-Report-Jan-20131.pdf

[Rodin]

Scale back in the IPO. Could bode well for strong after-market support/buying by instos with unsatisfied demand..

Scheduled to list later this week or early next week.


Strata-X Energy IPO to raise $12.5m
PUBLISHED: 2 HOURS 14 MINUTES AGO | UPDATE: 2 HOURS 11 MINUTES AGO
EDITED BY SARAH THOMPSON AND ANTHONY MACDONALD

Denver-based shale outfit Strata-X Energy will raise about $12.5 million in its Australian IPO, after joint lead managers BBY and Helmsec Global Capital scaled back some applications for shares over the weekend to ensure a tight after-market.

Strata-X, chaired by Queensland coal seam gas pioneer Ron Prefontaine, comfortably overshot the minimum $10 million raising in its sale of shares at 30¢ apiece, which closed on Friday.

Helmsec’s Simon Kidston reckons about 65 per cent of the stock was taken up by institutions, including a large UK group and some Asian funds, which are all just below the substantial shareholder level.

Prefontaine’s track record as one of the early starters in the Queensland coal seam gas exploration sector and at Arrow Energy counted with investors, Kidston says.

Prefontaine’s Australian CBM Pty assets were swallowed up by the original Arrow Energy in 2001 where he became a director before retiring in 2005 to focus on running spin-off CSG explorer Bow Energy.

Strata-X managing director and president Tim Hoops had been keen to raise over the minimum $10 million to allow some more options on planned drilling work, beyond the minimum planned at three key projects: the Vail venture in Illinois, the Maverick oil project in the Eagle Ford region of Texas and a Niobrara gas venture in North Dakota.

The company also has a longer-term shale exploration project in the Canning Basin in Western Australia but Kidston said the US venture were of most interest to investors.

The shares are due to list under the SXA ticker around February 20.