Here’s one from Sunoco Logistics Partners (SXL, Weiss Ratings: C), one of my favorite storage and pipeline master limited partnerships for the long-term. The company said it would sell 13.5 million shares (about $550 million at recent prices) to raise money for corporate purposes.
Here’s one from Energy Transfer Partners (ETP, Weiss Ratings: B-), another leading natural gas-focused MLP. It just sold $2.5 billion worth of bonds to refinance some debt and raise money for other endeavors.
Here’s one from a smaller Bakken Shale producer, Oasis Petroleum (OAS, Weiss Ratings: C+). It sold 32 million shares to raise $410 million.
And here’s news that one shale oil and gas firm, Whiting Petroleum (WLL, Weiss Ratings: C) is looking to sell the whole darn company! It could go for a price of several billion dollars, with at least one report linking the company to the giant international producer Statoil (STO, Weiss Ratings: C) of Norway.
|The smart money is betting on brighter days ahead for the energy sector.|
What’s the common link? What’s the takeaway? All that Armageddon-like commentary focused on the collapse of the American energy industry looks like bunk, that’s what! Instead, the “smart money” is betting on better days ahead in 2015, 2016 and beyond.
Consider what David Rubenstein had to say on CNBC a few days ago. He’s the co-CEO of the Carlyle Group, a massive private equity fund with $194 billion in assets under management. Asked about the energy sector meltdown, he responded by saying:
“The great fortunes are usually made when prices are low. They’re not usually made when you buy at the top and think they’ll get higher,” and “Prices are very low in energy, and a lot of people are scrambling, and that’s where you make a lot of money.”
All told, according to the Wall Street Journal, energy firms have raised more than $8 billion from equity offerings and almost $5 billion from high-yield bond sales so far in 2015. That’s far ahead of the pace of offerings last year, and it shows healthy investor demand for three primary reasons:
1) Investors need yield in a low-yield world …
2) Companies need to raise money to bolster balance sheets …
3) And most importantly, many energy experts think oil prices are at or near a bottom. They cite the combination of decent, growing demand, shrinking exploration and capex spending, and the collapse of weaker, less well-capitalized competitors.
The result, as Rice University professor and former energy sector investment banker William Arnold told Bloomberg:
“In this market, there are whales and there are fishes, and the whales are well armed … There are some very vulnerable little fishes out there trying to survive any way they can.”
Bottom line? I argued some time ago that the debt problems faced by the domestic energy industry were less severe than the catastrophic debt problems we faced in 2007-09. This is no “Housing Bust II” situation, which I (correctly) forecast ahead of time would lead to catastrophic fallout throughout the credit markets and the broader economy.
Instead, I noted that the recent collapse in energy share prices and energy itself was as bad — if not worse — than the greatest, historical pullbacks of the last several decades. That means the lion’s share of the damage has already been done, and the opportunity to snap up incredible, once-in-a-lifetime bargains is just too juicy to pass up.
I just recommended a new name in my Safe Money Report, one that recently raised a billion dollars via its own share sale to weather the storm and come out of it stronger. And I have other prospects that could really soar once the nearer-term turmoil settles out.
If you haven’t already checked that issue out, you still have time to get on board. The Big Money is already on the prowl, and that means the bargains won’t last forever!
Until next time,