U.S. oil drillers have reaped a combined US$28 billion from secondary stock offerings so far this year, as they are buying land and raising capital for M&A, fuelfix reported on Tuesday.
The capital that the drilling companies have raised from investors via more than 60 secondary stock offerings is second only to real estate investment trusts (REITs).
Anadarko Petroleum Corporation (NYSE:APC) has raised the highest single amount of cash from a stock offering this year, fuelfix’s Collin Eaton writes.
In its third-quarter results release last month, Anadarko said that it had completed successfully a US$2.16-billion equity offering during the quarter, and had around US$4 billion of cash on hand at the end of September. Anadarko said it planned to use some US$1.8 billion of the cash to fund its US$2 billion acquisition of a deepwater Gulf of Mexico property.
One of the latest public offerings was that of Rice Energy (NYSE:RICE), which completed its offering in October, raising around US$1.2 billion in net proceeds.
According to fuelfix, in the second half of this year alone, U.S. drillers have attracted US$14.6 billion in proceeds from secondary stock offerings, most of which is set to be used to buy land in the Permian in West Texas, in Oklahoma’s STACK and SCOOP plays, and in the Appalachian region.
The Permian, for example, has remained profitable even with the sub-$50 oil price, and is experiencing a true land rush as companies are trying to snatch acreages there while halting projects elsewhere.
At oil prices at around US$50 next year, U.S. companies are seen boosting spending by 37 percent, fuelfix quoted Simmons & Company International analyst Pearce Hammond as saying. However, such crude oil price is contingent on whether OPEC can pull off a deal to limit global crude supply, and if it somehow manages to clinch a production deal, U.S. drillers could be “off to the races”, Hammond told fuelfix.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.