In another sign of the bullish times for energy on Wall Street, one leading market-maker has recently announced the launch of an E&P and oilfield-services investment-banking group that will be run out of New Orleans.

With this move, Dahlman Rose & Co. LLC has in effect put the rest of The Street on notice: it plans to aggressively compete in the upstream and oil-service deal space. The New York-based investment banker specializes in public equity and debt issuance for marine-transportation, energy and natural-resource companies.

"We're very bullish on global commodity markets in general, and on oil and gas in particular, in terms of maintaining pricing power within the market," says Simon Rose, chief executive officer in New York.

"Given this view, we see the opportunity within the domestic E&P and service-sector space to help junior companies-those with market caps under $2 billion-raise capital to accelerate their drilling programs and to grow within the offshore oil-service area."

Underscoring this effort, the firm has named Stanley E. Ellington Jr., who formerly headed energy corporate finance for Capital One Southcoast Inc., as managing director and head of its New Orleans E&P and oil-service investment-banking group.

"Our focus in the upstream and oil-service space will be on private investment in public equity (PIPE) transactions for emerging companies, registered-direct equity offerings [private placements of equity for larger operators with current shelf registrations], and secondary public equity offerings," says Ellington.

In the past, Ellington and his team completed equity offerings for the likes of GMX Resources, Carrizo Oil & Gas, Southwestern Energy, Hercules Offshore and Hornbeck Offshore Services.

The firm's separate E&P and oilfield-service research efforts are in Houston and New York, headed up respectively by Neal Dingman and Omar Nokta.

What will distinguish Dahlman Rose from other investment banks vying in the energy space? The firm believes that it can raise equity capital for E&P and service companies at a lower cost than is currently available in the marketplace. Case in point: its registered-direct, $100-million equity offering this June for Arena Resources, a Tulsa E&P company focused mainly on the Permian Basin.

"Generally, when you do an equity offering, it's typically executed at an 8% discount from the pricing at the time the transaction is originally announced," says Rose. "However, by being able to translate Arena's story into terms readily understood by investors, we were able to complete that offering at a 3.3% discount."

Explains the Dahlman Rose head, "When you talk to institutional energy portfolio managers-and we deal with about 500 of them in the U.S. and Europe-and our bankers are talking only to energy-related companies, you develop an understanding of the energy market."

During the past 3.5 years, the firm has led- or co-managed more than $3.6 billion of offerings across the entire energy chain-from the drillbit to the downstream.

This includes a dominant role in providing equity to the tanker market and companies operating floating production, storage and offloading (FPSO) vessels. It also includes co-managing an $84.7-million equity offering for Gulfport Energy Corp., an Oklahoma City operator, to fund its capital expenses in Louisiana's coastal zone, and co-managing a $19-million stock offering for Austin, Texas-based Brigham Exploration Co., which accelerated that company's drilling activities in South Texas and leasing efforts in the Barnett shale.

This summer, the firm completed private placements of equity for two offshore companies: a US$70-million issuance for Sea Production, a Norwegian FPSO company, and another for a Norwegian provider of offshore drilling technology.

The ideal E&P financing candidate? "A quality management team with a proven track record, a significant amount of their own net worth in their company, and a defined prospect pool," says Ellington.

Rose observes wryly that many energy companies are like customers that buy wine at a supermarket. "However, for those seeking a more focused and specialized approach to their capital solutions, going to a wine store is better."

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