Canadian energy companies raised C$15.8 billion in 2004-a new record, according to Brent Heinz, an associate with Calgary-based Sayer Securities Ltd. Bumped to the No. 2 slot is the C$11.5 billion of financings of 2003. And the record-setting in 2004 didn't end there, Heinz adds in his year-end review. New high-water marks were made in the number of equity offerings (595), and the value of flow-through offerings (C$774 million) and debt placements (C$7.1 billion). Equity sales. Nearly a third-C$4.9 billion-of the 2004 fund-raising was from equity sales, up from C$2.9 billion in 2003. "One of the main contributors to the large equity total was companies raising funds for oil-sands development," Heinz says. Two oil-sands fund-raisers were through initial public offerings. Opti Canada raised C$301 million in its IPO, which had followed a C$750-million private placement. Deer Creek Energy Ltd. raised C$161 million in its IPO, Heinz reports. The number of equity offerings-595-was the most in a year in the 15 years Sayer Securities has been tracking Canadian energy financings. In second place is 492 in 1996, which resulted in raising C$4.6 billion, Heinz says. "The escalation in 2004 is reflective of the increased number of junior companies raising equity," he adds. Flow-through or "tax" equity placements in 2004 at C$774 million bumps the C$582 million of 2003 to the No. 2 slot. "The record flow-through value is supported by the growing junior exploration and production sector, which commonly chooses this type of financing," Heinz says. Debt placements. As for debt, the C$7.1 billion that was placed was mostly by senior E&P companies, and the financing vehicle remains the leading type of fund-raiser in the Canadian energy marketplace, Heinz reports. In the category, convertible debt increased 413% from 2003 to total C$1.2 billion in 2004, and straight debt placements grew 24% to C$5.8 billion. "The continued low-interest-rate environment has kept debt as an attractive choice for financings," Heinz says. A-rated corporate bond placements were priced at an average 5.35% at year-end 2004, down from 6.03% a year earlier. EnCana Corp. did the largest straight-debt deal-C$1.4 billion-and did the most straight-debt deal-making in 2004: a total of C$2.7 billion. Canadian Natural Resources was No. 2, raising C$827 million in two issues. Canadian Oil Sands Trust was No. 3 with C$724 million in four issues. As for convertible debt, that type of fund-raising was popular in 2004 among royalty income trusts (RITs), which raised C$1 billion in convertible deals compared with C$215 million in 2003. Their straight-debt issues totaled C$1.2 billion, up 9% from 2003. Unit placements. The RITs also tapped equity markets heavily, issuing C$3.8 billion of units in 2004, down from C$4.1 billion in 2003. "When the total of debt and equity is combined, RITs raised C$6 billion in 2004 compared with C$5.5 billion in 2003 and only C$1.9 billion in 2002. The large, recent increase in RIT issues is due to growth in this segment, both in the number of RITs, which at the end of 2004 was 32 compared with 18 in 2002, as well as the size of each individual RIT." Top trust-unit issuers were Pengrowth Energy Trust (C$500 million), PrimeWest Energy Trust (C$442 million) and Acclaim Energy Trust (C$338 million), Heinz says. Each were also big buyers in 2004, and all three were buyers of Canadian assets from U.S.-based companies: Pengrowth paid C$550 million to Murphy Oil Corp.; PrimeWest, C$806 million to Calpine Corp.; and Acclaim, C$434 million to ChevronTexaco Corp. (For more on Canadian M&A in 2004, see "Gobble or Go" in this issue.) "With the support in the markets for large-scale projects such as oil sands, and in small-scale projects typically undertaken by juniors, companies were able to access plenty of funding in 2004," Heinz says. "Continued expansion of the RIT segment and the growing number of E&P companies will provide lots of outlets for those interested in investing in the oil industry during 2005, which should be another active year for financings." -Petroleum Finance Week