KLR Group Raises Price Target on RSP Permian (RSPP) Following Delaware Acquisition
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KLR Group reiterated a Buy rating on RSP Permian, Inc. (NYSE: RSPP), and raised the price target to $55.00 (from $52.00), following the company's Delaware acquisition. The transaction adds ~41k net acres in the Delaware Basin to RSPP’s portfolio and ~15 MBoepd (~69% oil) of production. To fund the cash portion of the acquisition, RSPP priced ~25.3 mm shares at $39.75 for total gross proceeds of ~$1.01 bn.
Analyst Gail Nicholson commented, "We are increasing our target price $3 to $55 per share following the transformative Delaware Basin acquisition, the associated acceleration of our '17 forward rig tempo, and an ~10% improvement in capital productivity (legacy assets continue to outperform, 3Q/16 volumes ~4% better than our expectation) partly offset by the equity issuance. RSPP is acquiring Silver Hill Energy Partners for ~$2.4 bn consisting of ~$1.25 bn in cash and ~31 mm shares of RSP common stock. To fund the cash portion of the acquisition, RSPP priced ~25.3 mm shares (includes over allotment) at $39.75 for total gross proceeds of ~$1.01 bn. Including the shares issued to Silver Hill, RSPP shares outstanding increased ~55%."
Shares of RSP Permian, Inc. closed at $42.11 yesterday.
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