Income trusts fuel Canadian financings, up 14% from 2002

Gary Park

Petroleum News Calgary correspondent

A powerful combination of rising market demand for income trusts, high oil and natural gas prices, low interest rates and a fresh wave of junior companies boosted the total value of Canadian petroleum industry financings by 14 percent last year to C$11.4 billion, according to Sayer Securities.

The Calgary-based firm, which raises money for small and medium-sized firms, reported a staggering 190 percent hike in trust unit issues to C$4.1 billion from C$1.4 billion in both 2002 and 2001 and C$800 million in 2000.

Sayer said the trusts snapped up C$4.5 billion worth of assets last year, mostly to replace production and build reserves.

The trust ranks have mushroomed from 15 in 2000 to 18 at the end of 2002 and 28 at the end of 2003.

Sayer said debt financing for 2003 was valued at C$5 billion, as prime interest rates started and ended the year at 4.5 percent.

The primary issuers were Nexen with C$1.18 billion in two transactions, Petro-Canada with C$814 million in two deals, EnCana C$671 million, Suncor Energy C$657 million, Canadian Oil Sands Trust C$570 million and Pengrowth Energy Trust C$291.5 million.

Equity issues attracted C$2.3 billion, up 46 percent from 2002’s C$1.57 billion, with junior producers dominating the markets.

There is no sign of a slackening this year, with an initial public offering of C$52.5 million by Duvernay Oil drawing a flood of interest. Duvernay’s chief executive officer, Mike Rose, held the same post at Berkley Petroleum when it was acquired by Anadarko Petroleum for C$1.4 billion in 2001 — making him one of several experienced oil patch leaders who have taken the helm at start-up companies.