Craig Paradis (L) of Advance Drilling, operates the brake handle on a drilling rig for Crescent Point Energy as two roughnecks add a pipe extension to drill deeper into the Bakken formation near Oungre, Saskatchewan in this June 20, 2012 file photo.Rod Nickel/Staff/Reuters
There's a back-to-school sale on Canadian energy stocks, with three large acquisition-driven financings kicking off September.
Canadian energy companies tapped the market for about $1.2-billion on Tuesday alone to pay for acquisitions.
Pembina Pipeline Corp. set out to raise $150-million in a preferred share sale, before bumping that to $250-million amid strong demand, using the money to buy a pipeline system. Later Tuesday, Cardinal Energy Ltd. announced a $197.5-million common share offering to fund the purchase of oil fields in Alberta. Finally, Crescent Point Energy Corp. is raising $750-million to purchase assets from Lightstream Resources Ltd. and pay for increased capital spending.
The common denominator for the stock sales by Pembina Pipeline and Cardinal Energy is Canadian Imperial Bank of Commerce, acting as a lead on both. CIBC has been on a hot streak in the energy patch, garnering lead roles in the last four major energy initial public offerings, and its market share in overall energy equity deals is up significantly from 2013. (CIBC is not a lead on Crescent Point sale, but it is listed as a "strategic adviser" to the company on the M&A portion.)
"The tone is very good and investors are buying new issues and as a result our clients are able to do strategic things," said Mike Freeborn, who was brought in last year to take over as head of the CIBC energy practice in Calgary.
Some of the uptick appears to coincide with the appointment of Mr. Freeborn, who came back to CIBC after spending eight years at Goldman Sachs. With his return, Mark Horsfall moved from head of energy to a vice chairman role to concentrate on client coverage. That gave the bank more horsepower at the senior level.
Mr. Freeborn argues the timing had little to do with his arrival.
"The market's gotten a lot better and investors are buying equity new isuses. It's really years of hard work by Mark and the rest of the bankers on the ground," he said, as well as good coverage in other areas such as lending and commodities. "I just happened to come in when they started to bear fruit."
There is a solid pipeline of new deals that are not yet public, Mr. Freeborn said. Like the transactions announced Tuesday, most of those still in the offing focus on North America, where returns on oil and liquids fields are high.
"The international part will continue to be a part of the industry but the focus is more what is happening in the U.S. and Canada," Mr. Freeborn said.