PREMIUM FEATURES

2004 in focus: THE YEAR OF THE I.P.O.

THERE were 164 initial public offerings on the ASX last year – two more than the previous record set in 2000. Nineteen of these debuts were in the energy sector.

2004 in focus: THE YEAR OF THE I.P.O.

The best float performances in this sector were by Tomahawk Energy, which raised just $2.5m but then went on to make a 475% gain on this amount by the end of the year, and Hastings Diversified Utilities Fund, which raised $375m.

Perth-based Tomahawk Energy was previously Providence Capital, an investment company looking for something to invest in.

And it found its investment – an Oklahoma gas prospect in which it has enjoyed a 100% success rate.

Since listing in July 2004 Tomahawk has drilled eight wells where it has achieved a 100% drilling success rate and acquired a 50% working interest in another two wells.

The fourth well starting production brings Tomahawk’s net production to more than 700 million cubic feet per day.

These current producing wells alone will generate about $1.5 million revenue on an annualised basis and revenue is expected to rise significantly when the next wells are completed over the coming months, according to Tomahawk.

Six months ago when Tomahawk floated, the market had no way of knowing that the new energy minnow would be so successful so soon. The share price opened at a bit over 20 cents, soared to $1.55 by October, then settled back to $1.15 when trading closed for the year.

Last month Tomahawk raised another $3 million by placing 2.86 million shares at $1.05 each.

The Westpac-controlled Hastings Diversified Utilities Fund (HDUF) floated in December to a lukewarm response, closing the day at $2.53, just short of its $2.56 issue price. But the size of the float – $375m – made it the largest single IPO in Australia’s energy sector.

HDUF’s cornerstone assets are in the Moomba-to-Adelaide pipeline, the Pilbara pipeline in Western Australia and the South West Queensland pipeline system. At 1185km, the Moomba-to-Adelaide pipeline comprises just over half the total pipeline length owned by the company and is its single most valuable asset.

Another utilities fund – Diversified Utility & Energy Trust (DUET) – also listed. Backed by Macquarie, it raised $258m with an issue price of $2.29 and closed the year at $2.47, a rise of 8%.

Among the newly listed juniors, outstanding performers included Karoon Gas, Elixir Petroleum and Bass Strait Oil.

In June, Karoon’s IPO was oversubscribed and raised approx. $4.7 million.

The company was set up to target coal-bed methane prospects in Gippsland but surprised everyone by joining the big fish in the offshore Browse Basin after doing a deal with US independent Liberty Petroleum that will earn it 100% interest in two adjacent leases. The blocks are on trend with the giant gas condensate fields Brecknock and Scott Reef, and Karoon claims they are very prospective. Karoon closed the year at 48 cents, a gain of 203.7%.

In July, Elixir, a Perth-based company targeting North Sea prospects, closed its IPO oversubscribed after initially aiming for $3.3m with an issue price of 20 cents. It finished the year at 62 cents, a gain of 210%.

On September 30, Bass Strait Oil Company (BSOC) made an immediate impact on the ASX, listing at a 50% premium to its issue price.

Eyeing the company’s enviable assets in the Bass and Gippsland Basins, investors pushed stock up to 30 cents from its issue price of 20 cents, before settling at 28 cents on a turnover of 6.78 million shares. The float closed over-subscribed with 60 million shares on offer.

Just two weeks after listing BSOC was involved in the Moby gas discovery in Vic/P47, which will be linked to OMV's Patricia Baleen gas production hub, about five kilometres to the west. BSOC closed the year at 54 cents, a gain of 170%.

A couple of other companies that added more than 50% to their share values by the end of the year.

In September Liquefied Natural Gas debuted. This company aims to set-up “highly efficient and modest sized” LNG plants, access low-cost gas reserves and deliver them as LNG to energy markets which cannot be economically supplied by natural gas pipelines or are too small for the major LNG suppliers. LNG was up by 87.5% by the end of the year.

Hot rock specialist Petratherm listed in late July with an issue price of 20 cents and closed 2004 at 34 cents – up by 70%.

Also solid was Moby Oil and Gas, a Bass Strait specialist partnered with BSOC in the Moby discovery, that listed on 29 July with an issue price of 20 cents and was up to 27.5% - a gain of 38% for the year.

Cooper Basin oil and gas company Entek Energy listed in August after closing its $3.5 million IPO oversubscribed. It issued at 20 cents and finished the year at 30 cents.

Planet Gas, a company with coal-bed methane stakes in the US and Australia, listed in March, raising $15m. Its shares had an issue price of 20 cents and finished 2004 at 22 cents.

Enterprise Energy had a more subdued year, listing in a difficult week. Its 20 cent shares opened at 17c and were trading at 14 cents by the next day. It finished 2004 at 21 cents.

There were several listings in December. While it’s very much early days for these companies, they certainly presented a study in contrasts.

Oil and gas junior Anzon Australia made an impressive debut. Boosted by plans for early production from its offshore Gippsland oil fields, it opened 35% above its listing price. The company raised $45 million through the issue of 112.5 million shares at 40 cents each, underwritten by Euroz Securities. Beach Petroleum took 30.6 million shares – a 9.7% stake. The stock closed at 52 cents on its first day and finished the year at 55 cents.

On 23 December Metgasco, a firm set up to explore and develop coal-bed methane and conventional gas prospects in northern NSW, raised $5.2m with an issue price of 20 cents and finished the year at 22 cents.

Italian gas specialist Po Valley Energy had a solid start, raising $20m with an issue price of 20 cents and finished the year at $1.02.

Another overseas hydrocarbons specialist, Ottoman Energy, a company with Turkish stakes, listed a few days before Christmas. Ottoman raised $3m but the 20c shares never made it higher than their 17.5c opening mark, and slid to 16.5c. It finished the year at 17.5 cents.

Jackgreen, a NSW-based green energy provider listed about the same time. It raised $7 million by issuing 35 million shares at 20c. The stock opened at 19.5c and closed at 18c for the day. It finished the year at 19.5 cents.

While 2004 was good for energy stocks, a few players who listed relatively early in the year had seen their share prices fall by the end of the year.

Queensland coal-bed methane explorer and producer CH4 Gas listed in April and had fallen by 9.6% by the New Year. But to put this in perspective, its float raised $37.5mand its shares had an issue price of $1.25 (they finished 2004 at $1.13).

Ceramic Fuel Cells listed in July, raising $15m at an issue price of $1 per share. It finished 2004 at 98 cents, a drop of 2%.

But the biggest loser was Comet Ridge, a Queensland coal-bed methane company that raised $5m with a 20 cent issue price, but has lost 40% of its value since floating.

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