Oil And Gas IPOs Return Amid Oil Price Recovery
Excerpted from YAHOO! Finance
By Tsvetana Paraskova for Oilprice.com
The oil price crash has left energy companies scrambling to shore up balance sheets and streamline costs. But the recent recovery of crude prices has instilled cautious confidence among oil and gas firms that they might be able to raise capital for expansion via initial public offerings (IPOs).
After two years of near zero activity in the energy IPO market, new research by Simmons & Co has shown that there are plans for more than 20 oil and gas share listings, The Street reports.
With the price of oil holding above US$50 for more than three months now, it looks like institutional investors and private equity firms believe the time has come to return to financing growth in the oil and gas sector, which has had a rough two years in the downturn.
It took the industry two years and two months to see the first exploration and production (E&P) IPO since the start of the price slump – with Extraction Oil & Gas going public in October last year. This was the first such transaction since Independence Contract Drilling launched its IPO in August 2014.
Extraction Oil & Gas’ IPO was followed the a month later by that of WildHorse Resource Development Corp, an independent oil and gas field operator focused on the Eagle Ford shale play in Texas.
Other oil and gas, oilfield services and energy companies also followed suit in a sign that the industry is returning to the stock market hoping for high valuation of its assets.
“Investor response was cautiously discerning, yet encouraging,” investment bank GulfStar Group said in its Energy Outlook 2017, noting that it expects other private equity-backed companies to launch IPOs in the first half of this year.
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