Canadian producers raised C$7.3 billion in the first six months of 2006, down from C$8.5 billion in the similar period in 2005, consisting more of stock issuances and fewer debt and trust-unit placements.

Equity amounted to C$4.1 billion of the total, or 56%, according to Calgary-based Sayer Energy Advisors vice president Tom Pavic.

"The largest issues included international explorers, entities focused on the oil sands and junior E&P companies, with domestic conventional oil and natural gas production making up the remainder," Pavic says.

The largest equity deal, Pavic notes, was Addax Petroleum Corp.'s initial public offering of C$451 million, he adds. Addax is focused in Africa and the Middle East and is the largest independent producer in Nigeria with production of approximately 74,000 barrels per day.

Other large stock issuers were First Calgary Petroleum Ltd., with operations in Algeria, raising C$141 million, and Falcon Oil & Gas Ltd., with operations in Hungary and Romania, raising C$100 million.

North American Oil Sands Corp. raised C$325 million for its oil-sands business, he adds, and Connacher Oil and Gas Ltd. raised C$100 million to buy Luke Energy Ltd. and an oil refinery in Montana.

Among junior producers, Highpine Oil & Gas Ltd. and Breaker Energy Ltd. raised C$101 million and C$88 million, respectively. And, he adds, Duvernay Oil Corp. completed the biggest flow-through financing: C$56 million.

"There was a record total of C$624 million in flow-through equity raised in the first six months of 2006, a 121% increase from the C$282 million raised during the same time period in 2005. Typically, most of the flow-through issues occur in the latter half of the year and are a common source of financing for junior E&P companies."

Debt placement totaled C$2.7 billion in the first six months of 2006, or 38% of total capital raised, and 9% less than in 2005, according to Pavic. Talisman Energy Inc. placed US$500 million of 30-year notes and C$350 million of five-year notes.

The majority of debt placement was straight debt (C$2 billion) and approximately 75% was raised by Canadian Natural Resources Ltd., Compton Petroleum Corp. and Talisman, Pavic says. The balance was convertible debt.

Capital-raises by royalty income trusts (RITs) fell from C$2.1 billion in first-half 2005 to C$500 million, the lowest amount since C$312 million in first-half 2001.

Enerplus Resources Fund raised C$254 million. Despite this, RITs acquired C$7.8 billion in assets and companies during this time, nearly 16 times the capital raised, Pavic adds.

"The main reason for the significant difference between the two values is that many of the acquisitions done by RITs were completed using trust units or paper and very little cash."

The C$3.7-billion acquisition of Petrofund Energy Trust by Penn West Energy Trust was with units.

"If no unforeseen circumstances arise, the financing results for the first half of 2006 indicate equity issues will continue to be dominant for the remainder of the year. With the final few months of the year traditionally known as 'flow-through season,' all indications point to total equity financings easily breaking last year's record total of $7.8 billion."



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