Midstates Petroleum Co Inc's MPO.N shares opened marginally above their offer price, capping a week that saw the U.S. IPO market recovering with three impressive debuts.
The IPO market has been marked by poor pricing, pulled deals and delayed offerings in recent months. IPOs accounted for 11.3 percent of equity capital markets activity in the first quarter, down from 20.6 percent a year earlier, according to Thomson Reuters data.
This week's IPOs signaled a turnaround with shares of business technology companies Splunk Inc (SPLK.O) and Infoblox Inc BLOX.N as well as luxury bag maker Tumi Holdings Inc TUMI.N soaring on their first trading day.
Midstates shares opened 2 percent above their IPO price. The company had priced its offering at $13 per share, significantly below its expected range of $16 to $18.
Oil and gas companies have found it difficult to attract investors on their debut trading days. Of the 19 energy companies that have gone public in the last year, only Oiltanking Partners OILT.N opened more than 10 percent above the IPO price.
SandRidge Energy's (SD.N) unit, SandRidge Mississippian Trust II (SDR.N), which also went public this week, opened 4 percent above the offer price.
"Oil & gas companies are extremely risky...they are exposed to geopolitical conditions, to volatility of fuel prices... This makes investors wary," said Scott Sweet, senior managing partner at IPO Boutique.
Houston-based Midstates Petroleum offered 18 million shares and the selling stockholders the remaining 6 million.
Private investment firm First Reserve cut its stake in the company to 47 percent from 77 percent.
Midstates Petroleum focuses on oilfields in Louisiana that were discovered by major oil companies in the 1940s and 1950s, but left under-developed because of low oil prices, the adoption of a state-level severance tax and other regulatory hurdles.
The company's average daily production has grown to 7,499 barrels of oil equivalent per day in 2011 from 995 in 2008.
It has drilled 57 gross wells, 93 percent of which are in commercial production, in the same period. The company expects to drill 67 wells this year.
Midstates' 2011 revenue more than tripled to $209.4 million from 2010. It reported net income of $16.7 million, compared with a loss of $15.6 million in 2010.
Shares of the company were trading up 15 percent at $14.95 on the New York Stock Exchange.
(Reporting by Ashutosh Pandey and Eileen Anupa Soreng in Bangalore; Editing by Supriya Kurane and Don Sebastian)