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Oil, gas capital raises in May: Debt reliance continues as market calms

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Oil, gas capital raises in May: Debt reliance continues as market calms

U.S. oil and gas companies covered by S&P Global Market Intelligence raised about $4.87 billion of capital in May, down from the $5.17 billion raised in April. Companies raised $592.5 million from common equity offerings, $3.62 billion through debt offerings, $150 million through preferred equity offerings and $500.1 million from joint venture and private equity deals, although some amounts were undisclosed.

Since January, integrated oil and gas companies have raised almost $1 billion, down from $4.0 billion in the comparable 2017 period. Oil and gas storage and transportation companies raised $25.02 billion from January through May, compared to $20.10 billion in the previous year. Refining and marketing companies have raised $2.69 billion from January through May, lagging $5.80 billion in the year-ago period. Oil and gas exploration and production companies raised $10.03 billion for the first five months of 2018, compared to the 2017 January-to-May total of $16.64 billion.

Common equity

* Callon Petroleum Co. on May 24 sold 22,000,000 common shares, with a 30-day overallotment option for up to 3,300,000 additional common shares, to raise about $259.6 million. The company planned to use proceeds from the offering to partly fund its recently announced $570 million asset acquisition from Cimarex Energy Co. If the transaction does not materialize, Callon would use the net proceeds from the offering to fund exploration and development activities, redeem its preferred stock and for general corporate purposes.

* Matador Resources Co. on May 15 sold 7,000,000 common shares at $32.3731 apiece to raise about $226.6 million. The company intends to use the net proceeds to fund the aggregate capital expenditures related to acreage acquisitions and midstream development and for general corporate purposes, including funding a portion of the company's future capital expenditures. Pending such uses, Matador Resources intends to repay all outstanding borrowings under its revolving credit facility and invest the remaining funds in short-term marketable securities.

* PermRock Royalty Trust on May 1 sold 6,250,000 trust units, which represents about 51.4% beneficial interest in the company, at $17.00 per unit. Boaz Energy II LLC, the trust's sponsor that sold the units offered, granted the underwriters a 30-day overallotment option to purchase up to 937,500 additional trust units. The company raised about $106.3 million from the offering.

Debt

* Callon Petroleum on May 31 sold $400 million of its 6.375% senior unsecured notes due 2026. The offering, upsized from the previously announced offering of $300 million of the 2026 notes, was launched partly to help fund its $570 million acquisition of Delaware Basin oil and gas assets from Cimarex Energy.

* EP Energy Corp. unit EP Energy LLC, with its own subsidiary Everest Acquisition Finance Inc. as co-issuer, on May 18 sold $1.0 billion of its senior secured notes due 2026 to qualified institutional buyers and to certain people in offshore transactions.

* Valero Energy Corp. on May 17 sold $750 million of its 4.350% senior notes due 2028, with proceeds planned to be used for general corporate purposes, which may include funding the redemption of $750 million aggregate principal amount of its 9.375% senior notes due 2019.

* CrownRock LP on May 17 sold $150 million principal amount of 5.625% senior notes due 2025 as additional notes to its outstanding $1 billion 5.625% senior notes due 2025 that were issued in October 2017. The partnership raised about $181.8 million through the notes.

* WPX Energy Inc. on May 9 sold $500 million of its 5.750% senior unsecured notes due 2026, priced at 100% of par. The offering was upsized from the previously announced offering of $400 million of the 2026 notes.

* Enable Midstream Partners on May 7 sold $800 million of its 4.950% senior notes due 2028, priced at 99.197% of their face value. The partnership planned to use net proceeds from the offering for general partnership purposes, which may include repaying outstanding amounts under its 2015 term loan agreement and its commercial paper program.

Preferred equity

* DCP Midstream LP on May 9 sold 6,000,000 of its 7.875% series B preferred units at $25 per unit, with an overallotment option for up to 900,000 additional units. The partnership planned to use proceeds from the offering for general partnership purposes, including funding CapEx and repaying revolver debt.

Joint venture/private equity

* Rio Grande E&P LLC on May 30 received a round of funding of an undisclosed amount. Intrepid Investment Management LLC participated in the transaction.

* Silver Creek Midstream LLC on May 22 received $300 million in funding, which included an initial $150 million equity commitment from new investor Tailwater Capital LLC on Nov. 15, 2017.

* Northern Oil and Gas Inc. on May 15 raised $145 million from a common stock sale, which included a $52 million private placement.

* Venture Global LNG on May 10 received about $55 million in funding. Morgan Stanley & Co. LLC acted as a placement agent in the transaction.

* MMEX Resources Corp. on May 7 announced a private placement of a 12% convertible note for gross proceeds of $78,000. Current investor PowerUp Lending Group Ltd. participated in the transaction.

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