The first half of 2013 saw the quietest period in financings since CanOils launched its Financings database in January 2009.
According to the CanOils Database, a total of Cdn$5.2 billion was raised in upstream Canadian TSX or TSX-V listed financings in the first half of this year, in 115 issuances. Comparatively, during the same period in 2012, Cdn$5.7 billion was raised in 183 issuances, whilst in H1 2011 Cdn$8.9 billion was raised in 274 issuances. This predominantly downward trend has continued every half year since our records began in 2009.
The decrease in both the number of issuances and amount raised year on year is attributable to the TSX-V listed companies still struggling to raise finance, as the number of issuances halved from 146 in H1 2012 to 74 in H1 2013, whilst the total value fell by 13% from Cdn$1.1 billion to Cdn$0.99 billion respectively.
This is in comparison to the TSX which was relatively stable, with the value decreasing only 9% and the count increasing by 10% from H1 2012 to H1 2013.
Perhaps unsurprisingly, private placements made up a whopping 80% of the total financings completed in H1 2013, equating to 92 issuances in comparison to just 23 public offerings. However in value terms, public offerings accounted for 43% of those financings (Cdn$2.2 billion) whilst private placements made up the other 57%, raising Cdn$3 billion. By definition, a private placement is the sale of securities to a relatively small number of select investors, and thus is not required to be registered with regulatory authorities. In many cases, detailed financial information is not disclosed and the need to file a costly prospectus is waived, so for many companies these advantages have made private placements a much more attractive alternative to a public offering.
By financing type, the vast majority of financings are raised through brokered offerings year on year. However, the number of issuances involving underwriters or agents has halved in the first half of the past 3 years from 164 in H1 2011 to 85 in H1 2012 and just 46 in H1 2013. This is again likely to be due to the additional expenses and fees associated with engaging a broker. Despite this, underwriters and agents continue to negotiate the most finance each year.
Of the total number of brokered deals, National Bank Financial Inc. participated in the most deals (10) in H1 2013, acting as lead underwriter twice. In joint second place were CIBC and FirstEnergy Capital Corp. participating in eight deals each but whilst FirstEnergy lead once, CIBC lead in none. Casimir Capital lead the most brokered deals (4) overall.
A mere Cdn$390 million was raised by TSX-V listed Canadian E&P companies through equity financings over 58 issuances during the first half of this year, compared with 23 completed by those on the TSX for an impressive Cdn$1 billion.
The largest equity issue so far this year was the IPO completed by Oryx Petroleum Corporation Limited (TSX:OXC) on the 15th May for gross proceeds of Cdn$250 million. This was closely followed by a concurrent prospectus offering and private placement by Tourmaline Oil Corp. (TSX:TOU) on the 12th March for a total of Cdn$233 million (following another Cdn$38.7 million financing just 4 months earlier). Paramount Resources Ltd. (TSX:POU) was third highest with a prospectus offering on the 22nd May for a total of Cdn$150 million. The key purpose of the proceeds cited for these larger deals are to fund exploration and production activities.
Almost Cdn$3.8 billion was raised through debt issuances in H1 2013, up 25% from the corresponding period the previous year. This was made up of $3.2 billion from TSX listed E&P companies in 18 issuances and Cdn$0.6 billion in 16 issuances from those listed on the TSX-V. This compares with a total Cdn$2.8 billion raised in H1 2012, made up of $2.7 billion from TSX listed E&P companies in 14 issuances and Cdn$0.2 billion from those listed on the TSX-V in 19 issuances.
The top debt issuances in H1 2013 were non-convertible unsecured debt: Pacific Rubiales Energy Corp. (TSX:PRE) issued US$1 billion of 10-year senior unsecured notes on 28th March at a coupon rate of 5.125%, Canadian Natural Resources Limited (TSE:CNQ) came second on 23rd May with $500m of 2.89% unsecured notes due in August 14, 2020, and third largest was Crescent Point Energy Corp.’s (TSE:CPG) Cdn$311m raised in 3 separate senior guaranteed note issuances on June 12th. The key purpose in all of these issuances was simply to repay existing outstanding debt.
This report was created using CanOils’ financings database which tracks all Canadian TSX and TSX-V listed E&P financing deals on a daily basis and provides a comprehensive set of deal metrics. CanOils also tracks daily M&A deals, provides 10+ years of historical financial and operating data for TSX and TSX-V listed oil & gas companies as well as guidance, forecasts and an extensive oil sands product.