FYI: Desperate for cash, shale companies are trying to court investors with a new and potentially risky financial instrument that resembles mortgage bonds.
The companies are floating a type of asset-backed security that involves existing oil and gas wells. Producers transfer ownership interests in the wells to special entities that then issue bonds to be paid off by the output from the wells over time.
Raisa Energy LLC, a Denver-based oil-and-gas company backed by private equity firm EnCap Investments LP, closed the first such offering in September and several others are planned before the end of the year, said people familiar with the transactions. The bonds will pay nearly 6% interest on the best quality wells, the people said, with higher rates on riskier assets.
Regards,
Ted
https://www.wsj.com/articles/frackers-float-shale-bonds-as-traditional-investors-flee-11571606865
