Why do oil companies undertake secondary fundraising on AIM?
Secondary fundraising by AIM listed oil and gas companies in Q1 was £184.9 million, 40% lower than Q1 2011 and 30% lower than Q4 2011. Over 80% of this relates to just five companies – 88% of AIM oil and gas companies raised no capital. In contrast, secondary fundraising across the wider AIM market was stronger in Q1. The £955.0 million raised was 26% higher than Q4 2011’s total. Reported Ernst and Young’s ‘Oil and Gas Eye’
Secondary fundraising has become part of the norm for small/mid cap oil and gas operators listed on AIM, but why do these companies raise secondary funds?
- Fund upcoming drilling operations
- Accelerate commercialisation of proven reserves
- Develop farm out opportunities
- Proceed with exploration activity
Do you agree with these reasons? Could you add any other reasons to this list?
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