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2018-03-11 11:30:00

U.S. OIL INVESTMENT

U.S. OIL INVESTMENT

REUTERSHigher oil prices and a positive earnings outlook for energy companies are expected to fuel a rebound in North American oil and gas initial public offerings in 2018, with bankers betting investors will remain optimistic about the sector even if the broader stock market remains volatile.

IPOs in the United States and Canada could reach their highest in four years, and oilfield services companies are seen leading the recovery, given their pressing capital needs.

More than a dozen energy companies are lining up to list this year, including several private equity-backed U.S. exploration and production (E&P) companies.

Denham Capital-backed Covey Park Energy may be the first of these names, with initial conversations with investors planned in the next few weeks, followed by a formal deal marketing depending on investor response, two sources aware of the matter told Reuters.

Indigo Natural Resources said Jan. 29 it had previously filed a confidential proposal with the Securities and Exchange Commission to go public, with timing dependent on market conditions.

Vine Resources is also eyeing an IPO this year, while potential Canadian candidates include Canbriam Energy and Velvet Energy, two separate sources said. Warburg Pincus [WP.UL], one of the biggest private equity investors in the Canadian energy patch, backs both Canbriam and Velvet.

Denham and Warburg declined to comment. Vine-backer Blackstone Group did not respond to requests for comment.

Access to equity markets for energy firms comes at an opportune time for private equity firms seeking to cash out of long-held investments.

Investors are encouraged that crude prices have stayed above $60 a barrel even as drilling activity pushed U.S. oil output past 10 million barrels per day for the first time since 1970. Company fundamentals are also more resilient than 12 months ago, supporting the IPO pipeline.

"The stability in oil prices is a net positive. If energy companies can demonstrate to investors that they can generate cash flow in the current oil price environment, they can go public," said Grant Kernaghan, Citigroup's managing director of Canadian investment banking. "The recent volatility hasn't resulted in markets shutting down," he added, suggesting equity markets were still open despite a 10-session period up to Feb. 8 when the S&P 500 dropped over 10 percent.

OIL SLUMP

Still, experts said any selloff on the oil market that pushes crude prices below $60 could derail these plans to go public.

After 20 IPOs worth $11.7 billion in 2014, the slump in oil from mid-2014 saw the subsequent three years raising just a combined $9.8 billion from 21 offerings, according to Thomson Reuters data. So far this year, five energy IPOs have raised $1.26 billion, according to Reuters calculations.

Four of these five oilfield services IPOs had successful debuts, while IPSCO Tubulars pulled its offering due to the market selloff. Quintana Energy Services Inc priced its IPO below the guidance range and then saw its stock drop further upon opening. However, Cactus Inc sold more shares than originally planned and traded higher on its first day.

Unlike last year, when an initial flurry of energy IPOs was curtailed by a slump in crude prices, bankers hope stronger fundamentals will sustain interest in new offerings in 2018.

Last year, services IPOs were based on forward earnings and lacked existing cash flows, meaning falling oil prices undermined investor confidence. "Now, companies are well supported by current earnings and trade at low multiples," said Robert Santangelo, co-head of equity capital markets for the Americas at Credit Suisse.

So far, exploration and production (E&P) companies have not shown the same willingness as services firms to accept a lower valuation that would restart offerings from that space, creating a "Mexican stand-off" between potential IPO candidates over who goes first, according to one energy banker who spoke on condition of anonymity.

Covey has an incentive to go first: a financing agreement that becomes more expensive if it is not able to list this year, according to one of the sources aware of the IPO plans.

Even as companies prepare for IPOs, M&A remains a viable exit option for buyout firms.

"Private equity firms have been waiting for a better environment. The settling of the oil price does help them move forward," said Kevin Headland, senior investment strategist at Manulife Investments.

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Earlier:

 Investments
2018, March, 7, 14:25:00

OIL NEED $20 TLN

SAUDI ARAMCO - our industry needs more than 20 trillion dollars over the next quarter century to meet rising demand for oil and gas (including in ageing infrastructure).

 

 Investments
2018, February, 5, 07:42:00

MEXICO'S OIL INVESTMENT $100 BLN

FT - Mexico secured almost $100bn in investment in its most successful oil tender to date as Anglo-Dutch oil major Royal Dutch Shell positioned itself as the biggest player in deepwater exploration and new companies including Qatar Petroleum burst on to the scene.

 

 Investments
2018, January, 26, 12:25:00

CHINA'S ARCTIC ROAD

REUTERS - “China hopes to work with all parties to build a ‘Polar Silk Road’ through developing the Arctic shipping routes,” the paper, issued by the State Council Information Office, said.

 

 Investments
2018, January, 15, 10:00:00

FOSSIL FUELS DIVESTMENT $5 BLN

RBF - New York City Mayor Bill de Blasio and Comptroller Scott Stringer announced plans to divest the city’s five pension funds of approximately $5 billion in fossil fuel investments in an effort to safeguard the retirement plans of the city’s employees from the threat of underperforming assets. The total size of the retirement funds, $189 billion, makes New York City the largest American municipality to divest to date.

 

 Investments
2018, January, 5, 23:35:00

LNG INVESTMENTS WILL UP

BLOOMBERG - Energy companies will approve investments for more than 150 million tons a year of new supply capacity over the next four years, according to the report. By comparison, global consumption was 286 million tons in 2017. Projects in Qatar, Papua New Guinea, Russia and the U.S. are most economically appealing, followed by Mozambique, Australian expansion projects and an Alaskan mega-project.

 

 Investments
2017, December, 13, 12:15:00

WBG: NO OIL&GAS FINANCE

WBG - The World Bank Group will no longer finance upstream oil and gas, after 2019.

 

 

 Investments
2017, December, 4, 23:05:00

UKRAINE'S GAS INVESTMENT UP TO 46%

УКРТРАНСГАЗ - According to Ukrtransgaz’ performance results in the first nine months of 2017, capital investments in Ukraine’s gas transmission facilities increased by 46% or UAH 486 million compared to the same period of 2016, Ukrtransgaz public and media relations department reports.

Tags: USA, OIL, INVESTMENT, IPO

Chronicle:

U.S. OIL INVESTMENT
2018, June, 25, 12:05:00

ВЗАИМОПОНИМАНИЕ НОВАТЭК И KOGAS

НОВАТЭК - Подписанный меморандум закрепляет намерения сторон рассмотреть возможности вхождения KOGAS в проект «Арктик СПГ 2» и приобретения СПГ с проекта, участие в проекте перевалки на Камчатке и других инфраструктурных проектах, а также развивать сотрудничество в области торговли СПГ и оптимизации логистики, включая своповые операции.

U.S. OIL INVESTMENT
2018, June, 25, 12:01:00

U.S. RIGS DOWN 7 TO 1,052

BAKER HUGHES A GE - U.S. Rig Count is down 3 rigs from last week to 1,059, with oil rigs up 1 to 863, gas rigs down 4 to 194 and miscellaneous rigs unchanged at 2. Canada Rig Count is up 27 rigs from last week to 139, with oil rigs up 18 to 87 and gas rigs up 9 to 52.

U.S. OIL INVESTMENT
2018, June, 22, 13:40:00

OIL PRICE: NEAR $74 ANEW

REUTERS - Benchmark Brent crude LCOc1 was up $1.05 a barrel at $74.10 by 0925 GMT. U.S. light crude CLc1 was 80 cents higher at $66.34.

U.S. OIL INVESTMENT
2018, June, 22, 13:35:00

ДОБЫЧА НЕФТИ: + 1 МБД

МИНЭНЕРГО РОССИИ - По итогам заседания расширенного мониторингового комитета большинством его участников было рекомендовано рассмотреть на предстоящей министерской встрече ОПЕК и последующей за ней министерской встрече с участием не входящих в ОПЕК стран-экспортеров нефти увеличение добычи на 1 млн барр в сутки (от текущего уровня) с распределением этого объема между участниками соглашения.

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