Canadian oil industry treasury financings dropped 48% to $3.7 billion (Can.) during the first half of this year, compared with $7 billion during the first 6 months of 2002.
Both the equity and debt categories decreased, while new issues of royalty income trust (RIT) units increased to a record, said Frank J.D. Sayer, founder and president of Sayer Securities Ltd., an investment firm specializing in oil and gas companies.
The debt category experienced the biggest decline, Sayer said. Statistics show that $800 million was raised through debt issues during the first half, compared with $5.7 billion recorded for the same period in 2002.
Equity financings fell slightly. In the first half of 2003, companies raised $690 million in the equity markets, down 10% from the $770 million during the first 6 months of 2002.
The total amount of financings completed by RITs for the first 6 months of 2003 was $2.22 billion, up over 300% from the first half of last year. Sayer noted that the existence of more RITs contributed to the increased financings.
The number of RITs operating in the Canadian oil and gas industry during the last year has grown by 44%. Sayer said that 23 RITs existed as of June 30, compared with 16 active RITs existed at the same time last year. The number of RITs continues to grow.
Within the RITs category, Canadian Oil Sands Trust raised the most money with a total of $984.8 million in four separate trust unit deals. Paramount Energy Trust raised the second largest amount at $213.4 million. Shiningbank Energy Income Fund was third with $155.1 million. All three trusts are based in Calgary.
RITs also participated strongly in the debt category. As a group, they completed 94% of the straight debt issues and 85% of the convertible debt issues.
