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Oklahoma energy companies seek alternative sources of capital

Changing energy markets have made it easier for some energy companies to raise money.
by Adam Wilmoth Modified: November 3, 2013 at 10:00 pm •  Published: November 3, 2013

The domestic energy industry is rapidly evolving with new technology and new focus areas throughout the country.

The capital market that is funding the renewed energy activity is changing rapidly to keep up.

“I have regarded there to be a consistently good level of private equity money available for this industry for quite some time,” said Curt Launer, energy research analyst at Deutsche Bank in New York. “But it's gone in ebbs and flows and in different places from time to time.”

Today, that private money is available throughout much of the oil and natural gas industry, said Mihoko Manabe, vice president and senior credit officer at Moody's Investors Service in New York.

“Private equity money will go where the opportunities are,” Manabe said. “There are a lot of opportunities in energy right now. There is investment opportunity all the way down the energy value chain, from upstream production to midstream to distribution channels downstream.”

Local benefits

The trend is benefiting Oklahoma energy companies at all stages, including Tapstone Energy LLC, which was recently founded by former SandRidge CEO and founder Tom Ward.

“Today is the first time in decades that you have access to private capital,” Ward said at the Bloomberg Energy Conference in Houston last month. “When we started SandRidge and Chesapeake, the private equity market was different than it is today. If you wanted to run a company of any size, you had to be in the public market because that's where the capital was.”

Continental Resources Inc. CEO Harold Hamm has tried his hand at several investment options.

Hamm operated Continental as a privately held company for decades before taking it public in 2007. While the company is now publicly traded, Hamm still controls 68 percent of its stock.

Hiland Partners was publicly traded from 2005 to 2009 until Hamm bought it back and made it private again.

“One thing about being publicly traded is that the availability of capital is better and generally the borrowing rates are lower,” Hamm said.

Continental used its inflow of capital from becoming publicly traded to help it develop the Bakken field in North Dakota.

“I couldn't have accelerated into it as quickly without the availability of the cash and capital brought about by us going public,” Hamm said. “I couldn't have maintained the position we have up there. That would have been impossible in that instance.”

As a publicly traded company, however, executives work for the shareholders and lose some of the control of the direction of the company.

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by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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