UPDATE 2-SandRidge Energy IPO raises $746 mln, above range
(Adds business details, analysts' comments, valuation information)
NEW YORK Nov 5 (Reuters) - SandRidge Energy Inc (SD.N), an oil and natural gas exploration company based in Oklahoma City, raised $746.2 million on Monday with an initial public offering that priced above a forecast range.
The 28.7 million share offering, increased in size from 26 million shares, priced at $26, compared with a forecast range of $22 to $24, according to a company statement.
Based on its offering price, SandRidge has an initial market capitalization of about $3.5 billion.
The company plans to use proceeds from its offering, which floated about 39 percent of the company, to pay down debt.
Chief Executive Tom Ward, who already held about 34 percent of the company before the offering through various entities including family trusts, said he will buy a further 4.2 million shares at the offering price, according to the company's statement.
SandRidge is active in exploration in the West Texas Overthrust, where it has tripled its acreage since last year, according to its registration statement with the U.S. Securities and Exchange Commission.
Its foothold in the area likely helped it win investor interest, according to one analyst.
"It is a very hot area, and they (SandRidge) have very large acreage," said Scott Sweet, managing director of research firm IPOboutique.com.
The company, through a subsidiary PetroSource Energy Companyy, also collects carbon dioxide in the West Texas Overthrust Area, which can be used to extract more oil after traditional methods have been used, according to its filing.
"They are very diversified," said Sweet.
The company also likely earned investor points for its strong management team, with its CEO being an industry heavyweight -- Ward founded industry giant Chesapeake Energy (CHK.N) -- who has carefully recruited other executives, including a new chief financial officer hailing from a career at Goldman Sachs (GS.N) and Bear Stearns BSC.N.
"He (Ward) has about as good a background as you can have," said Francis Gaskins, president of research firm IPOdesktop.com. "And he must have extreme confidence in the future of the company," Gaskins added. "He could have had options issued, but instead he is buying more shares (at the offering price).
"CEOs don't usually put hard money down on the table. That is a big plus."
Based on a price-to-earnings comparison with Houston-based oil and gas company Apache Corp (APA.N), SandRidge is about 4.5 times more richly valued, said Gaskins.
However, on a price-to book basis, SandRidge rates a 2.2 verus Apache's 2.4.
Gaskins said SandRidge probably looks expensive on a price-to-earnings basis, because it recently acquired properties that give it strong potential for future earnings, but are not yet fully reflected in recent results.
For the six months ended June 30, SandRidge had net income of $15 million, on revenue of $308 million. That compared to net income of $14 million on revenue of $173.8 million in the same period a year earlier.
Underwriters, led by Lehman Bros LEH.N, Goldman Sachs (GS.N) and Banc of America (BAC.N), have the option to purchase an additional 3.7 million shares to cover overallotments.
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