All in all I feel this is very positive. Dilution yes but added profits and is providing the needed economy of scale to thrive
"Anticipated Benefits of Private Placement
Approximate 30% increase in Fiscal Q4 2014 EBITDA guidance for 19.9% increase in share count
Approximate 20% increase in Fiscal Q4 2014 production guidance
Lowers G&A and other fixed overhead costs on a per unit basis
Escalated operated drilling program improves predictability of operated production volumes through greater frequency of well completions
Higher capacity utilization at RPES and Caliber Midstream ("CLBR") drives margin expansion
Increased economies of scale at RPES and CLBR
Accelerated drilling program and proven reserves growth expected to increase credit facility borrowing base
Provides balance sheet strength to support an accelerated capital program
Deeper alignment with high quality, long-term equity partner
RockPile Energy Services Credit Facility
RPES secured $20 million of debt financing from Wells Fargo Bank
Includes revolving line of credit and equipment and capex term loan facilities
Proceeds will fund second pressure pumping spread planned to be operational in Q2 fiscal 2014
Triangle expects RPES to be self-funding going forward (no additional Triangle equity)
Increased Fiscal Year 2014 Capital Expenditure Budget
The fiscal year 2014 capex budget has been increased from $190 million to $245 million (including previously announced 2nd RPES pressure pumping spread), primarily supporting the operated development program
Increasing operated drilling program with the addition of a full-time rig, taking the operated rig count to three full-time rigs
Planned gross operated wells spud increasing from 24 to 33 and gross operated well completions increasing from 24 to 28-30"
This is great! Dilution by 20% certainly sucks, but increasing the value of the company by 30%, the elimination of debt, and making RPES self-funding (huge revenue stream) seem well worth it to me, even looking at it short term. Also - $6 share price is not that big of a discount considering the $4.75 price tag last May and that the stock was sub $6 for three of the last four months. This is great - should drive the stock north of $8 once that debt is retired.
Our analysts will love this deal. They are always focused on debt levels and reserve/EBITDA growth. RPES obviously has talent, now they have more tools. The Street loves toll roads like Caliber. Who understands this situation better than NGP and they just voted.
I do not really like the dilution but key is no debt and and a real return on the investment. What better can you do than make investment with almost certain return. They need to get to that point where the economy of scale kicks in