High energy prices are still fueling investor interest in energy company initial public offerings.
The big reputation of Bill Barrett, 76, helped the IPO of Bill Barrett Corp.
The IPO shares were priced at $25, above the expected $20-to-$23-a-share range. That strength carried over into initial trading today, with the stock hitting $29.45 -- up 18% from the IPO price. With Bill Barrett Corp.'s $300 million in hand and a promising portfolio of drilling opportunities, the outlook is encouraging. But with a market capitalization now exceeding $1 billion and yearly sales of just $75 million, the company has to continue its strong growth to justify the stock price.
The largest energy IPO of the week was Foundation Coal Holdings
The offering is interesting because the bulk of the proceeds will be used to pay pre-public shareholders a $394 million dividend. That still leaves the company with plenty of money to reduce debt and for other corporate purposes.
The stock initially took off, trading as high as $23.45 a share. It has settled back and now trades at the IPO price.
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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.