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If you are thinking of starting a business in Canada, there are many opportunities for investors. For instance, oil drillers are looking for investors to step in and save their operations as the price of crude oil keeps sinking. It seems that tapping into equity markets has become the best option for energy companies looking to reduce their debt. And the figures speak for themselves because three months into 2015, about $8 billion has been raised, which is more than ten times the amount that was raised in a similar period in 2014. Also, read about one of the angel investors in Canada, Mr. Rana Vig on The Province Blog.
Energy companies have come to accept that the low price of oil will persist for a while and so oil producers have turned to the equity markets. In addition, these companies are convinced that the worst is yet to come and so they’re tapping into the equity markets because a time will come when that will not be possible. Issuing new stock was never an option when oil drillers started seeing the market crashing towards the end of 2014. However, things have now changed and if you are a businessman looking to invest in Canada, you should look no further than the oil companies.
Many oil producers had assumed that there wouldn’t be a lot of interest in putting additional money into their sector. Funding from equity or debt was not expected to materialize but things started changing in February 2015 when the oil prices appeared to stabilize, which led to the frozen equity and credit markets opening up. As for the $8 billion raised from selling shares within three months in 2015, this is the highest amount that has ever been raised for over ten years. If this pace continues, the sale of shares would exceed the total amounts raised in 2008 and 2009.
The dilution of the existing shareholders is the result of the surge in new equity offerings. But oil producers are now considering this as a necessary evil. Instead of selling their assets at throw-away prices or borrowing at exorbitant interest rates, oil companies would rather sell a stake in their companies. This is great news for anyone who is looking for investment opportunities in Canada. Being debt free is a good thing for oil producers because they don’t have to pay back equity, disburse revenue or net profits. It also buys into their plan and also works for those companies that are able to ride the storm while waiting for commodity prices to start rising.
As an investor, what makes this a great investment opportunity is that you’ll be buying in when the market is at its lowest and so you are going to reap big dividends when prices start to rise. However, many oil executives expect a much longer downturn and so investors should be in it for the long haul. Fortunately, many oil companies that have issued their stock also offer lucrative long-term growth opportunities. For others though, it’s merely a question of survival and buying more time while the market is experiencing a downturn. If you’re a savvy investor and you’re looking for investment opportunities in Canada, oil is really the black gold.