Issue link: http://www.e-digitaleditions.com/i/1192317
Lawson Lundell LLP 3 Finance Summary A hopeful equity rally in the Spring of 2018 was followed by a harrowing Fall in which the differential on heavy oil increased substantially, leaving certain blends of Canadian crude the cheapest in the world and forcing Alberta's government to impose production curtailments of approximately 9% of daily production to prevent widespread crisis. This pricing and production quagmire was most acutely reflected in the capital markets where capital raising effectively ground to a halt. In terms of general activity across the sector, the prevailing theme was fewer and smaller with 55 deals in 2018 (126 in 2017) for proceeds of $7.7 billion ($40.3 billion in 2017). The asset sale became the preferred means of protecting the balance sheet in the place of capital from the dilution markets. 2017 was the year of acquisition finance, with the number of major deals anticipated to get even bigger in 2018 in the wake of Canadian exits. As it turned out, 2018 was largely the year of doing nothing. Upstream finance led the contraction. There were only five public offerings by upstream issuers in all of 2018, for proceeds of $294 million, down from 16 offerings in 2017 for proceeds of $4.3 billion and 42 offerings in 2016 for proceeds of $8.6 billion. Montney liquids and Duvernay oil drove the very limited upstream equity headlines. NuVista completed the largest equity financings in both the public and private markets in order to support its acquisition of Cenovus' Alberta Montney assets. Hammerhead and Artis both secured private equity commitments for oil development in the Montney and Duvernay formations. Pipestone (Monteny liquids) and Arrow (Colombian oil) both used reverse takeovers to go-public. There were no initial public offerings. Upstream Midstream Downstream Oilfield Services Equity (Prospectus) 200 1 5,962 8 Equity (Prospectus) 294 5 4,444 21 2,411 15 6,529 20 Debt 3 1,597 4,810 8 Debt 954 2 485 1 Debt 922 4 1,234 5 Debt 7,696 55 26,327 104 Total 2018 Deal Value (CAD Millions) 2018 Deal Count Three Year Average Deal Value (CAD Millions) Three Year Average Deal Count 1,186 20 1,349 28 Equity (Private Placement) - - 682 1 Equity (Private Placement) - - 223 1 Equity (Private Placement) 106 2 451 7 Equity (Prospectus) 26 3 158 4 Equity (Private Placement)