Oil companies could kick off a series of initial public offerings this year as the U.S. shale industry gains purchase on Wall Street again.
Credit Suisse believes around 30 privately held drillers, oil field service companies and pipeline operators could go public this year in transactions worth a total $8.5 billion, nearly four times more than last year, when low energy prices drained investors’ appetite for energy newcomers. In recent months, the oil-market recovery and a resurgence of drilling have restored some confidence on Wall Street.
“It’s a very open market,” said Osmar Abib, global co-head of oil and gas at Credit Suisse. “Just because it got challenged in the depths of the downturn doesn’t mean it closed permanently.”
Abib declined to name the companies Credit Suisse expects to make Wall Street debuts this year because they haven’t made their plans public. Fifteen of these firms, worth an estimated $3.5 billion, are oil field service companies that supply drillers with hydraulic fracturing technology, frac sand, logistic services and other tools used to stimulate shale oil and gas wells.
Some of these companies reorganized their debt or went into bankruptcy during the two-year oil rout, and now distressed debt investors and private equity groups are looking for a pay day, banking on a wave of U.S. drilling that has lifted demand for oil equipment. Some could go public as early as the end of April, followed by more over the summer, Abib said.
Credit Suisse said 10 to 12 exploration and production companies, worth about $4 billion combined, could also launch IPOs this year, along with four midstream companies worth about $1 billion.