- Pioneer Natural Resources' (PXD +1.3%) unexpected $1.4B equity raise means the fittest U.S. shale oil producers can still tap capital markets, but it is not a signal that the floodgates are open, since highly leveraged firms cannot do what PXD did.
- Reuters reports that the PXD offering was ~2x oversubscribed, in part because the company is known for its low debt load, high-quality acreage in the Permian Basin and aggressive derivatives program that helps it sell most of its oil well above spot prices.
- Some analysts say PXD was being proactive by raising cash now, perhaps a tacit admission by management that oil prices may not recover anytime soon.
- PXD fell sharply yesterday to $116 as the addition of 12M shares was dilutive by 8%, but Cowen analysts say the stock could be valued at $190 if new wells continue to show signs of rising productivity.