28 February 2015, News Wires – Exploration and production companies are bracing for a sustained period of low commodity prices by deleveraging through stock sales – and well-funded firms are surprisingly leading the way.
Ahead of the semi-annual redetermination of credit facilities, eight US explorers have been able to raise US$3bn so far this year through the sales, even though crude prices remain anemic.
And most are firms that are not facing the liquidity crunch that has hit much of the E&P sector, including investment-grade rated Noble Energy, which raised $1bn this week.
“The biggest correlation to industry valuations is financial leverage, not what basin they are operating in or how they are hedged,” said Robert Santangelo, co-head of Americas equity capital markets at Credit Suisse.
Investment-grade rated Noble (Baa2/BBB-) sold 21m shares overnight Wednesday via Goldman Sachs and JP Morgan at $47.50, in the upper half of the $46.50-$48.00 marketing range and relative to a $49.81 last sale.
The banks and Noble’s management discussed the financing confidentially with select institutional investors before more broadly marketing publicly, according to market sources.
Newfield Exploration (Ba1/BBB-) surfaced Thursday morning with a sale of 22m shares at $33.00, an increase from the 18m shares that had been marketed at $32.60-$33.70 via sole bookrunner Credit Suisse.