Cabot Oil & Gas (ticker: COG; CabotOG.com) announced on February 22, 2016, the company is commencing a public offering of 44,000,000 shares of its common stock at a price of $20.00 per share. An additional 6,600,000 shares will be available to the underwriters. The Company expects to use the net proceeds from the offering for general corporate purposes, including repaying indebtedness under the Company’s revolving credit facility, bolstering liquidity and funding a portion of the Company’s capital program.
Cabot currently has 414.06 million shares outstanding, which would equate to an overall dilution of 12.2%, assuming the underwriters exercise the full amount of options and bring the total offering to 50,600,000 shares.
Companies across the oil and gas industry have been raising capital early in 2016 to help improve company liquidity and raise money to fund capital programs. A few of the offerings are listed in the table.
| Share Dilution | Stock Change 48 Hours Following Offering | ||
| Pioneer Natural Resources | 1/5/2016 | -8.03% | -7.45% |
| Diamondback Energy | 1/13/2016 | -6.14% | 1.63% |
| Synergy Resources | 1/21/2016 | -12.72% | 4.44% |
| Oasis Petroleum | 1/28/2016 | -27.63% | 14.23% |
| Energen | 2/17/2016 | -4.66% | 6.64% |
| EQT Corporation | 2/19/2016 | -10.55% | -1.13% |
The market’s response to these offerings has been mixed. Volatility in the commodity markets has largely translated into the capital markets, which could be responsible for the lack of overall dilution in the stock price. The market could also believe that oil prices have found or are close to a bottom and are shrugging off the potential effects of share dilution.
