Rose Rock Midstream plans $140M IPO

Orlando, FL 12/7/11 (StreetBeat) --Rose Rock Midstream plans to raise $140 million in an initial public offering as it splits from the company that owns its general partner.

The Tulsa, Okla., oil and gas company joins a growing list of energy IPOs this year. Memorial Production Partners L.P., a Houston natural gas producer, is planning a $200 million offering. Both companies are expected to begin trading this week.

Rose Rock is offering 7 million common units at between $19 and $21 each. It expects net proceeds of $127.3 million, after deducting expenses, and will use the cash to pay SemGroup in return for Rose Rock's assets. SemGroup also owns the company's general partner. The company plans to pay investors a quarterly distribution of 36.25 cents per unit.

Rose Rock produces, stores and transports crude oil in Colorado, Kansas, Montana, North Dakota, Oklahoma and Texas. Its major assets include a 5 million-barrel storage terminal in Cushing, Okla., where benchmark West Texas Intermediate crude is delivered. It also owns and operates a 640-mile oil pipeline in 670,000 barrels of available storage in Kansas and northern Okla.

Much of its assets are in the Midwest, a lucrative region for the petroleum industry this year. A lack of pipelines has created a glut of oil supplies in the region, and that has pushed benchmark oil prices down compared with other varieties of crude. Energy companies have clamored to get access to the cheaper Midwestern oil and that has increased business for companies that own pipelines, storage facilities and other assets in the area.

Rose Rock points out that government forecasts show American oil consumption growing by 13.8 percent between 2009 and 2035. That will likely increase demand for oil fields, pipelines and storage facilities.

The company said it earned $14.9 million in the first nine months of the year on revenue of $299.1 million. It didn't provide a comparison with the same period last year.

Barclays Capital, Citigroup, and Deutsche Bank Securities are listed as the primary underwriters of the deal. It plans to trade on the New York Stock Exchange under the symbol "RRMS"

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