Returning Contango Kills Short Term Upside

Friday, July 15, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. New equity issued as lifeline for oil and gas companies

– U.S. E&P companies are issuing new equity at “record speed,” Bloomberg reported. – New debt issuance has collapsed as creditors lock out much of the industry, so oil drillers are using equity for cash infusions. – U.S. companies have raised $16 billion in new shares this year, more than half of the $29 billion that has been raised, Bloomberg says. Over the past five years, new equity only represented about a quarter of capital raised. – But equity offers better cash positions without new debt. Normally, companies worry about dilution, but several firms have issued equity this year without too much of a hit to their share price. Pioneer Natural Resources (NYSE: PXD) is a good example of this, issuing new shares and using the cash to buy up assets and finance drilling.

2. New hiring?

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– The oil industry has laid off more than 350,000 people around the world. In the U.S., payrolls in the “mining and logging” sector, which in government data includes oil and gas, dropped below 400,000 in May for the first time…