As you have probably noticed, there is an air of optimism that has swept over the oil and gas industry over the past few months. Most research analysts seem to have adopted the mood as well, although the term we typically hear from them is "cautious optimism." Whatever you call it, it's refreshing to hear more talk about deals and drilling than about reorganization and restructuring.
Producers, lenders, and investors all seem to have come to terms with crude oil priced between $50 and $60 per barrel, which is a range where prices are expected to stay for a while - barring the unforeseen, of course. Forecasters seem to be comfortable with these prices holding for an extended period.
Here is what some of our contributors to our annual Energy Capital report are saying about raising capital in the current atmosphere:
Cliff Vrielink, Tim Chandler, and Ryan Scofield of Sidley Austin LLP note that a growing number of midstream and service companies are issuing convertible preferred equity to handpicked private equity funds and similar investors in private placements in order to raise capital. These issuances are exempt from the registration requirements of the Securities Act of 1933. Their article discusses the structure and terms of most private placements of preferred securities in the energy industry and focuses on the most-negotiated commercial terms and their implications for issuers and investors.
Philip Racusin of EnergyFunders gives a brief history of crowdfunding and discusses the "epic growth" in the few years it has been available to investors and project sponsors. The World Bank estimates that crowdfunding in all industries will reach $90 billion by 2020. Racusin says that crowdfunding affords smaller oil and gas operators with a platform for generating capital and allows small investors to gain a foothold in oil and gas.
Finally, Mark Young of Evaluate Energy examines the massive resurgence of M&A activity in the Marcellus shale. Last year saw the largest number of deals in the Marcellus since the first real M&A boom in 2010.
We hope you find this report interesting and worthwhile.
Don Stowers
Chief Editor
OGFJ
