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Barnett, Marcellus-Focused Vantage Plans IPO, Hopes to Raise $400M

Vantage Energy Inc., a company focused on the Barnett and Marcellus shales, hopes to raise up to $400 million through an initial public offering (IPO) on the New York Stock Exchange, according to documents filed Monday with the U.S. Securities and Exchange Commission (SEC).

According to a Form S-1, the company, which is based in Englewood, CO, intends to have its stock listed on the exchange under the symbol "VEI."

The filing lists a proposed maximum aggregate offering price of $400 million -- an estimate for fee-calculation purposes, but the company also said the offering would include shares issuable upon exercise of the underwriters' option to purchase additional shares of common stock.

Vantage did not say how many shares it would offer and did not disclose an asking price.

A prospectus summary included in the filing says Vantage had net production of 63.3 MMcfe/d in 2013, up from 18.1 MMcfe/d in 2011, resulting in a compounded annual growth rate of 86.8%. The company said its estimated average net daily wellhead production for the first five days of July was 82.5 MMcfe/d.

Vantage said it holds 51,771 net acres in Greene County, PA, a mostly contiguous position that overlies the Marcellus Shale. The company also said it holds approximately 38,347 net acres in the Barnett Shale, including 23,043 net acres in Denton, Tarrant and Wise counties, TX, that it considers to be core acreage in the Barnett. Vantage said it has two rigs deployed in the Marcellus and two in the Barnett, and plans to operate four rigs through the remainder of 2014.

Vantage said it also holds more than 80,000 net acres in other project areas, primarily in the Uinta Basin in Utah. "Although we are not actively developing these assets, we believe that they provide significant upside potential to our core operations," the company said.

The company added that as of April 30, it had identified 1,074 potential drilling locations, including 423 in the Marcellus, 339 in the Barnett, and 312 in the Upper Devonian Shale.

As of July 1, Vantage had 49 gross horizontal wells drilled in the Marcellus, of which it was operating 42 wells. Of the 49 wells, 18 were in production and five were temporarily shut-in for drilling and completion operations. The remaining wells were either awaiting completion, were in the process of being completed, or were completed but awaiting connection to a pipeline.

In the Barnett, the company had 106 gross horizontal wells drilled as of July 1, excluding those that had been plugged or shut-in. Of the 106 wells, 73 were in production and four were temporarily shut-in for drilling and completion operations. The wells that remained were either awaiting completion or were in the process of being completed.

Vantage said it allocated $540 million for capital expenditures (capex) in 2014, including $441 million for drilling and completions; $54 million for gathering, compression and dehydration construction activities; $40 million for leasehold acquisitions; and $5 million for seismic and other activities.

Under a proposed corporate reorganization, Vantage told the SEC that its sponsors -- specifically, investment funds affiliated with or managed by Quantum Energy Partners, Riverstone Holdings LLC and Lime Rock Partners -- and management members would control Vantage Investment LLC and Vantage Investment II LLC, which would each own an undisclosed stake in VEI. Public stockholders would hold the rest.

Vantage was formed in 2006 by Roger Biemans and Tom Tyree Jr. (see Daily GPI, Dec. 20, 2006). Biemans is a former president of EnCana Oil & Gas USA Inc., while Tyree is a former CFO of Bill Barrett Corp.

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