The first U.S. upstream IPO since June 2014 will have to wait a little longer.

After filing for a public offering in June, Centennial Resource Development LLC instead grabbed private dollars to exit its position in the Southern Delaware Basin.

Riverstone Holdings LLC said July 7 it signed an agreement to acquire a majority stake in Centennial from NGP Energy Capital. The investment by Riverstone is expected to comprise up to $175 million.

Centennial filed paperwork on June 22 with the U.S. Securities and Exchange Commission that would’ve made it the first U.S. E&P to launch an IPO since the downturn.

However, the company had a change of heart most likely due to a combination of a relatively strong sale price and the uncertainty of any public offering, said Neal Dingmann, managing director of energy research at SunTrust Robinson Humphrey.

Many established public companies have successfully launched follow-on offerings, but commodity prices remain somewhat stubbornly locked at about $50 per barrel.

“Given the transaction in lieu of IPO, we estimate the price per acre could be a new high-water mark for the Delaware Basin, and in our opinion the deal bodes well for other Delaware players,” Dingmann said in a report.

RELATED: Exit Strategy: Permian E&P Set To Launch First Upstream IPO In Two Years

IPOs are known for providing private equity-backed companies an exit with better returns than selling to a larger E&P. Centennial's IPO is likely the harbinger of a few other Permian E&Ps that will try the market, Bill Marko, managing director of Jefferies LLC, told Hart Energy.

Given the basin’s unbeatable economics and continued resilience, Marko predicts Permian operators to be the first to return to the market.

Centennial’s properties consist of large, contiguous acreage blocks in Reeves, Ward and Pecos counties in Texas. The company has 61 operated producing horizontal wells with established commercial production in the third Bone Spring Sandstone, Upper Wolfcamp A, Lower Wolfcamp B, Wolfcamp B and Wolfcamp C.

In May and June, Centennial closed acquisitions contiguous to its position. In the two deals, the company acquired about 2,400 net acres, mostly operated, adding 250 boe/d of production. In 2016, the company has spent about $44 million on acquisitions.

Centennial has a $65 million term loan and $77 million on its revolving credit facility. The company’s borrowing base was $140 million as of April.

The sale of Centennial to Riverstone is expected to close in late September.

Emily Moser can be reached at emoser@hartenergy.com.

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