Stephen Lacey is US Editor for International Financing Review, helping to oversee editorial content across the region. He has particular expertise in coverage of the equity capital markets – IPOs, follow-on stock sales, and equity-linked securities – spanning the entire corporate life cycle, from venture and private equity to entry and maturation in the public markets.
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E&Ps and other energy companies have long utilised master limited partnerships as a captive source of funding. They benefit not only from the valuation arbitrage of selling assets into the tax-advantaged MLP but also from cash flows received on distributions paid on underlying ownership – build assets at the parent, sell assets to MLP subsidiary to grow distribution, and repeat process.
Whiting Petroleum, like many North American E&Ps, is in an unenviable position. After spending heavily on acquisitions and then seeing oil prices plunge, the company emerged asset-rich but liquidity constrained, while needing to maintain spending on further development.
Refinancing across the E&P space continues at full speed. Antero Resources is the latest to purge its balance sheet, after the Marcellus/Utica Shale-focused explorer agreed to raise US$485m in a block sale of stock prior to the market open on Thursday.