OilVoice - AIM-Listed Oil and Gas Companies Enjoy Consecutive Growth Periods

AIM-Listed Oil and Gas Companies Enjoy Consecutive Growth Periods

Monday, August 24, 2009

U.K. listed oil and gas companies enjoyed a second-consecutive period of growth in the second quarter of 2009, rising by some 24%.

The positive trend can be largely attributed to a cocktail of rising commodity prices and a continuously improving wave of economic confidence returning to the market, reversing last autumn’s unprecedented downturn.

Ernst & Young’s Alternative Investment Market (AIM) index currently stands 57% up since the turn of the year; however it remains 58% down on the same period in 2008. The index represents 57% of AIM energy stocks by market weight.

London’s AIM-listed oil and gas companies successfully raised £281 million during the three month period to June 30 – the highest level of fundraising recorded since the fourth quarter of 2007, and a figure 12% up on the second quarter of 2008.

Despite the return to growth financing remains closed to the large majority of gas and oil companies operating in the U.K – some of whom are worryingly short of cash, according to a report released by Ernst & Young on Monday.

The report said: “Many investors (are) facing the difficult choice of providing additional capital or letting in investee companies fail.” The evidence is one again in the numbers – only 19 of the 115 AIM-listed oil and gas companies have been successful in their pursuit of raising capital, and subsequently hold a strong advantage over their struggling competitors.

Among this elite group successful in securing new funds are: Afren, Bowleven, Petroceltic International, Bankers Petroleum, Providence Resources, and Aurelian Oil & Gas.

The report continued: “There is light at the end of the tunnel for some, but by no means all.

“Access to affordable finance remains challenging for many companies,” it concluded.

However, for those companies still without additional financing Ernst & Young’s report provides some much needed relief, forecasting that there were signs of easing in the availability of capital.

In total in the first half of the calendar year – despite being nearly 50% down on the first half of 2008 – there were 236 upstream deals in the oil and gas arena. This at least brings to a halt the trend of companies which began de-listing from the AIM market at the start of the year.

Alec Carstairs, a partner at Ernst & Young, commented: “The future outlook, although not certain, is becoming more positive.”

Thanks to the recovery in the price of a barrel of crude oil the share prices of nearly 80% of AIM oil and gas companies ended the second quarter higher than what they started out at, and perhaps represent a microcosm of the industry at large.