Energy Spin-Offs Still Outstanding (ETR, CVI)

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Last week, we noted in "Trouble Brewing in Oil & Gas MLP Land" that many MLP spin-offs had either not been coming public since their IPO filing dates, but there are more deals that are still either gone or still pending that would seem to be easy IPO’s in the current climate.  Entergy (NYSE:ETR) and CVR Energy Inc. (NYSE:CVI) are two more that have pending deals, and others are canceled or pending.

Proposed MLP IPO’s are not the only ones that have either been withdrawn or are still pending. Forum Oilfield Technologies filed for an IPO in October 2007, but withdrew the filing on the same day that Plains pulled its proposed IPO. Forum cited "market conditions" as its reason from withdrawing.

Entergy (NYSE:ETR) announced a plan to spin-off its nuclear generating facilities in November 2007. Entergy has announced names and logos for the new company, Enexus Energy Corp, and for the nuclear operating company that Entergy and Enexus will create, EquaGen L.L.C. This one is still likely to happen, despite the silly names.

CVR Energy Inc. (NYSE:CVI) announced plans in February to spin off an MLP to own and operate its nitrogen fertilizer plant and other projects. CVR Energy reports first quarter earnings after market close today.   We also covered this one much more in-depth in our Special Situation newsletter.  The company told us in a telephone call that the spin-off IPO is still pending, but that was also before the company warned on results.

The failure, or slow pace, of IPOs even affected the hot renewable market. Renewable Energy Group filed for an IPO in July 2007, and withdrew its offering in March.

Oil is north of $120.00 per barrel.  Energy IPOs, whether for MLPs or not, are having a tough time.  A logic class would surmise that investors don’t want to catch the top-tick in what may be an unproven entity after a monumental run.

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Paul Ausick
May 19, 2008