#USA #Houston #Natural Gas #senior unsecured notes #Kimmeridge Texas Gas

Kimmeridge Texas Gas Launches $500 Million Notes Offering

On January 8, 2025, Kimmeridge Texas Gas (KTG), a key player in natural gas production, declared the successful pricing of its inaugural $500 million Senior Unsecured Notes Offering, set at an attractive 8.50%. The culmination of this offering exemplifies the robust confidence investors place in the company's operational and financial strengths, especially in a rapidly recovering natural gas market.

A Strong Demand from Investors

This offering significantly exceeded expectations, garnering an impressive oversubscription of more than five times the original amount. This remarkable demand was primarily driven by a diverse range of blue-chip investors, demonstrating their steadfast trust in KTG’s evolving prospectus. In the wake of meetings held with over 30 high-yield investors, KTG managed to create a favorable order book that reflects the increasing interest in debt securities within the energy sector.

The company’s Chief Financial Officer, Bryan Gunderson, emphasized the importance of this milestone, noting, “This inaugural bond offering reflects the strength of our differentiated platform and the confidence investors have in our future.” The raised capital will be pivotal for paying off existing revolving borrowings and supporting ongoing initiatives aimed at creating a fully integrated natural gas supply chain, from extraction to distribution, with a commitment to net-zero emissions.

Financing Growth Initiatives

The offerings will primarily advance KTG’s strategy of developing environmentally responsible and financially viable energy assets. By utilizing the proceeds to reduce outstanding debt, the company aims to accelerate growth and establish itself as a formidable player in the U.S. natural gas market. KTG's long-term vision includes enhancing its collaborative efforts with Commonwealth LNG, a crucial step in advancing its sustainable natural gas initiatives.

Since its inception, KTG has championed an eco-conscious approach to energy production, constantly seeking innovative solutions to reduce carbon footprints throughout its operations. With the backing of Kimmeridge, the firm’s primary investor, the company possesses around 162,000 net acres across Texas’s Eagle Ford Shale. This strategic positioning enables KTG to produce approximately 400 million cubic feet equivalent per day, securing its place in the South Texas market and maximizing its potential for exports to Mexico and global LNG terminals.

The Role of Bank of America

Bank of America took the helm as the lead book-running manager for this offering, indicating a strong partnership with one of the leading banking institutions in the financial market. Their support is expected to help navigate the complexities associated with such substantial financial moves. The deal not only highlights KTG’s ambitious trajectory but also underscores the overall recovery and optimism in the energy sector, particularly in the natural gas landscape which has witnessed fluctuations in demand and pricing due to global economic dynamics.

In summary, Kimmeridge Texas Gas’s ability to launch this $500 million Senior Unsecured Notes Offering is a testament to its strategic planning and the growing interest among investors in sustainable energy initiatives. As KTG continues to leverage its operational strengths, the company aims to redefine its future in the natural gas arena while making significant contributions toward environmental sustainability.

Conclusion

As the energy market evolves, KTG stands as a promising force committed to innovation and responsible energy production. This inaugural bond offering sets the stage for robust growth, paving the way for Kimmeridge Texas Gas to solidify its position as a leader in the unfolding narrative of natural gas production and sustainability.