Canadian oil industry treasury financings were down 48% in first-half 2003 to C$3.7 billion, compared with the first six months of 2002, according to investment-banking firm Sayer Securities Ltd., Calgary. Of deals done, there was a smaller volume of equity and debt offerings, while offerings of royalty income trust (RIT) units increased, setting a new record. The most significant change was in debt offerings, which declined to C$800 million in the first half, compared with C$5.7 billion during first-half 2002. Equity financings fell slightly to C$690 million in the first half, compared with C$770 million. Meanwhile, RITs offered C$2.22 billion during the first half of 2003, up 300% from first-half 2002. "Some of this change can be attributed to the fact that there are now more RITs than there were at the end of June 2002," says Frank J.D. Sayer, principal. He counted 23 Canadian oil and gas RITs on June 30, compared with 16 on that date in 2002. "In the last quarter alone, Bonavista Petroleum Ltd. and Peyto Exploration & Development Corp. reorganized into a RIT structure. Currently, Baytex Energy Ltd. and Crescent Point Energy Ltd. are awaiting shareholders' approval to do the same, which will put the total at 25." Among the RITs, Canadian Oil Sands Trust raised the most money during the first half: a total of C$984.8 million in four unit offerings, which were primarily related to its purchase of EnCana Corp.'s interest in the Syncrude joint venture. Paramount Energy Trust raised the second-largest amount (C$213.4 million). Shiningbank Energy Income Fund was third, with C$155.1 million in funds raised from unit offerings. "The presence of RITs was also very strongly felt in the debt category," Sayer adds. They completed 94% of straight debt issues, and 85% of convertible debt issues. "Had RITs not been raising funds through debt, the total for the first six months of 2003 would have been only C$56.1 million, meaning debt financings for E&P companies were virtually non-existent." Offering equity during the first half was Western Oil Sands Inc. Its C$50.2-million stock sale was the largest during the period. Large E&P companies-ones with market capitalizations of more than C$500 million-continue to dwindle, he adds. "However, smaller, start-up E&P companies have replaced the larger ones as the driving force in the equity market. The smaller companies are undertaking acquisitions and are raising money to close the deals." Hawker Resources Inc. issued C$45.0 million in June to buy assets from the former Southward Energy Ltd. Meanwhile, Great Northern Exploration Ltd., which recently bought assets in the Red Deer area of Alberta, raised C$28.8 million. "International operations are becoming another use of funds, as several Canadian-based oil and gas companies completed financings for overseas activities," Sayer says. Niko Resources Ltd., which has operations in India, issued C$39.4 million during the first half, and First Calgary Petroleums Ltd. raised C$35.0 million to help pay its exploration bills in Algeria. -A&D Watch

Comments