New shale IPO will test wary investors

The first initial public offering for a shale driller in almost half a decade will test investors’ desire for an industry that’s still dusting off from last year’s historic energy-market bust.

Vine Energy, which is backed by private-equity giant The Blackstone Group, plans to sell almost 19 million shares on the New York Stock Exchange as soon as this week. With an initial price range of $16 to $19 per share, the issuance could be valued as high as $357 million.

The natural gas explorer is coming to the market as shale drillers grapple with investor pressure to restrain spending and production growth for the sake of shareholder returns and avoiding new supply gluts.

The 7-year-old company is led by Eric Marsh, the former gas chief at EnCana Corp., which drilled the first exploration well in the Haynesville Shale in Louisiana about 15 years ago, according to Bloomberg Intelligence. EnCana is now known as Ovintiv.

“It will be a great test for appetite in the market for energy companies and underlying valuations,” said Mark Rossano, founder and chief executive officer of C6 Capital Holdings. “Based on how the IPO is received, it could open up additional companies bringing stock or debt to market.”

Vine is the first shale driller to IPO since Jagged Peak Energy in early 2017. Three years later, Jagged Peak was acquired by Parsley Energy, which has since been taken over by Pioneer Natural Resources.