Canadian energy producers such as Whitecap Resources Inc. (TSE: WCP) and Cardinal Energy Ltd. (TSE: CJ) may tap equity markets to fund acquisitions as the oil price collapse spurs deals, Bloomberg reported Feb. 26.

“I wouldn’t be surprised to see more equity financings,” John Stephenson, CEO of Stephenson & Co., said Feb. 24 by e-mail. “Whitecap and Cardinal will be the likely active consolidators and they will need to raise capital.”

Oil prices at five-year lows are crimping cash flow for energy producers, which are selling shares to fund spending plans. Last week, for example, Cenovus Energy Inc. (NYSE, TSE: CVE) announced an equity financing of C$1.5 billion (US$1.2 billion). Consolidators also are selling shares, including Raging River Exploration Inc., which raised C$88.3 million this month before an asset acquisition in Saskatchewan.

Future equity financings may be used to fund capital programs, acquisitions and repay debt, Greg Dean, Toronto-based fund manager at Cambridge Global Asset Management, said in a Feb. 23 interview. Producers are more likely to acquire assets than entire companies, he said.

“It’s split between the haves and the have-nots,” Dean said. “The haves are being opportunistic with financings, the have-nots have bad balance sheets that need to be fixed and will need to sell assets and/or cut dividends.”

‘Nothing Imminent’

Other potential buyers that may raise equity to fund purchases include Crescent Point Energy Corp. (NYSE, TSE: CPG), Vermilion Energy Inc. (NYSE, TSE: VET), Kelt Exploration Ltd. (TSE: KEL) and Tourmaline Oil Corp. (TSE: TOU), Robert Pare, an analyst at Clarus Securities Inc. in Calgary, said in a Feb. 20 e-mail.

“We are always looking at various asset and corporate acquisitions but certainly nothing imminent,” Scott Kirker, a Tourmaline spokesman, said in an e-mail Feb. 20. “So we have no plans to raise capital for that purpose at the moment.”

Cardinal is looking for asset acquisitions, but has no plans “at this time” to raise capital, Scott Ratushny, the company’s chairman and CEO, said in an e-mail Feb. 20.

Spokesmen from Crescent Point, Vermilion and Kelt didn’t immediately respond to e-mailed requests for comment. Whitecap CEO Grant Fagerheim was unavailable for comment.