Shares of oil-and-gas company Lone Pine Resources Inc. declined in early trading Thursday, its first day as a public stock.
The company’s shares opened at $12.45 a share on the New York Stock Exchange, down 4.2 percent from its initial public offering price of $13; it was changing hands at $12.55 at 9:30 a.m. It sold 15 million shares at a price below its expected range of $18 to $20.
Based in Canada, Lone Pine is a subsidiary of Denver-based Forest Oil Corp., which continues to own more than 80 percent of the company post-IPO. Once its six-month lockup period ends, Forest Oil plans to spin off its remaining ownership of the stock to its shareholders through a special dividend.
Lone Pine explores, develops and produces oil and gas in Canada. Over the past two years, the company has divested about $142 million in non-core or non-operated oil-and-gas properties, and spent about $48 million on new, undeveloped acreage that it believes has strong growth potential. From 2008 to 2010, it reduced its lease-operating expenses per unit by about 25 percent.
The company plans to continue divesting land that it doesn’t want and acquiring new properties and leaseholds that will be more productive. It also intends to use newer, more expensive technology such as horizontal drilling and fracture stimulation to increase production of oil and gas from areas where conventional vertical wells aren’t able to access it.
About 80 percent of Lone Pine’s land is undeveloped, and it is focused on extracting gas from shale land that it owns in Quebec and the Northwest Territories. The company, which currently operates 80 percent of its production, plans to operate nearly all its planned drilling in 2011, a move it says allows it to maintain control over costs.
Its recent financial performance wasn’t a hit. In the first quarter of 2011, revenue fell 3 percent to $36.3 million due to a decrease in the average sales price per unit. Net income declined 56 percent to $6.5 million, primarily due to increased production expense and depreciation, depletion, and amortization expenses.
In 2010, the company said revenues increased 30 percent to $146 million as average sales price per unit went up, and it recorded net income of $33.7 million compared to a loss of $138.8 million in 2009.
J.P. Morgan Chase & Co., Credit Suisse Group and TD Securities LLC managed Lone Pine’s offering.
