Oil sands juniors act like seniors in 2004 financings

A handful of oil sands start-ups took the major role in boosting Canadian oil industry equity financings in 2004, according to Calgary-based Sayer Securities, which provides a range of corporate finance and research services.

The overall value of financings soared 37 percent from 2003 to a record C$15 billion, with the equity category posting the biggest gain to C$4.9 billion from C$2.4 billion.

Leading the way were OPTI Canada, which raised C$750 million privately and attracted another C$301 million through an initial public offering to support its 50 percent stake in the Long Lake joint venture with Nexen; Deer Creek which generated gross proceeds of C$161 million from a share offering for its Joslyn project; and UTS Energy, which raised C$100 million towards its Fort Hills project for a possible C$2 billion venture.

Sayer financial analyst Brent Heinz reported that the equity issues totaled 595, the largest in the 15 years his firm has been tracking the statistics, reflecting the number of junior companies raising equity. He said that among senior producers, debt equity remains the financing of choice, setting a new record of C$7.1 billion in 2004.

With all issues rolled in, EnCana raised C$1.4 billion, Canadian Natural Resources C$827 million and Canadian Oil Sands Trust C$724 million. Royalty income trusts raised C$6 billion through combined debt and equity, up C$500 million from 2003 and C$4.1 billion from 2002.

Heinz predicted another active year in 2005, given the outlook for expansion in the trust sector and the growing number of E&P companies.

—Gary Park