Small Oil Firms Hunt For Cash As Crude Slump Shuts IPO Door

Small Oil Firms Hunt For Cash As Crude Slump Shuts IPO Door
Slumping oil prices are shutting the door to stock market listings for small oil and gas firms, forcing many to tap more costly forms of financing or to shelve projects and wait for better times.

Reuters

LONDON, Jan 20 (Reuters) - Slumping oil prices are shutting the door to stock market listings for small oil and gas firms, forcing many to tap more costly forms of financing or to shelve projects and wait for better times.

Initial public offerings (IPOs) in the oil and gas sector worldwide have dwindled since crude started sliding in June. The amount raised through listings in the second half of 2014 fell 63 percent from the first six months of the year to $3.8 billion, Thomson Reuters data showed.

Energy company listings shelved since July include Dubai's oil-rig contractor Shelf Drilling, which was planning to list on the London Stock Exchange, and Samudra Energy, which owns oil and gas interests in Indonesia and was eyeing a listing in Singapore.

"Projects and IPOs are being cancelled and companies are stopping and thinking what they're going to do next," Ashley Wright, energy partner at legal firm Norton Rose Fulbright in Singapore, said.

Since July, only one oil and gas producer or explorer, Savannah Petroleum, has listed on Britain's Alternative Investment Market (AIM), a traditional source of funding for many small energy firms, according to accountancy firm UHY Hacker Young.

Advisers and bankers warn that new listings may stop completely this year as crude languishes near its lowest level since 2009 at just below $50 dollar a barrel, eating into the profit of producers and forcing oil majors to cut spending on exploration and machinery.

"I don't think we're going to see many, if any, resource AIM IPOs in 2015, certainly not in oil with the price at $50," said Chris Searle, capital markets partner at adviser BDO UK.


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