As capital comes to the forefront and public offerings gain steam, the U.S. energy sector this year should see sustained growth from equity and bond offerings, according to PLS Inc.

Oil and natural gas equity and bond deals rose in 2016, while the aggregate value fell by $10 billion from 2015, PLS said. The statistical review issued Monday of capital markets activity was conducted by Capitalize, a tracking firm owned by PLS.

Last year 346 bond and equity transactions worth $186 billion were completed, versus 322 for $196 billion in 2015. By comparison, in 2014 when commodity prices were stronger, 410 deals were done worth a combined $211 billion.

“The 2016 capital markets landscape was characterized by some interesting phenomena,” PLS said. “Capitalize saw upstream companies coming out with multiple offerings in 2016, fueled substantially by the need to raise money to act upon opportunities to grab inexpensive assets.

Some companies go years without doing even one secondary offering.”

Onshore exploration and production companies piled on with offerings, some more than twice.

According to Capitalize, Callon Petroleum raised about $1.3 billion across four offerings last year while Parsley Energy and Synergy Resources issued equity three times. Two offerings each were made by Matador Resources, Rice Energy (plus one for its midstream subsidiary), Resolute Energy, Gulfport Energy, PDC Energy, SM Energy and Ring Energy.

The top energy upstream equity offering last year was by Anadarko Petroleum Corp. for $1.876 billion, followed by Pioneer Natural Resources Co. for $1.404 billion. Devon Energy Corp. had an equity offering of $1.294 billion and Concho Resources had one for $1.155 billion. Offerings of at least $1 billion also were made by Marathon Oil Corp., Southwestern Energy Co., Diamondback Energy Inc., Rice and Encana Corp. Hess Corp. issued a $975 million offering too.

Following an absence from the energy equity landscape, last year also saw the return of two blank-check initial public offerings (IPO) in the energy sector. Silver Run Acquisition Corp., launched in February 2016, in September became Permian Basin-focused Centennial Resource Development LLC. KLR Energy Acquisition Corp. combined with Tema Oil & Gas to form Rosehill Resources Inc., also Permian-directed, in a transaction that is expected to close in the first half of 2017.

Most of the companies that filed for bankruptcy last year were prepared with at least a preliminary restructuring support agreement (RSA) in hand, which enabled the process to move through the courts at a quicker pace.

“Those that hadn’t garnered strong support from creditors and other stakeholders from the onset, like Energy XXI Ltd., waited over eight months to get through the process. Swift Energy Co. like its name suggests, got through in just three months.”

Tender offers are still hot, according to PLS. As examples, it noted that Chesapeake Energy Corp. and Devon “undertook massive waterfall tender offers on several series of outstanding debt last year. Tender offer activity among overburdened oil companies was consistent throughout the year, continuing the momentum begun in 2015.

“Tendered debt was swapped for new debt, cash or a combination. Most everyone paid an early tender premium of $30 per each $1,000 of debt tendered. Many companies did equity or new debt raises for cash to pay for the tender offers.”

More CEOs and CFOs said they would spend without their means during 2016, while others used the year “as an experiment to ratchet capital expenditures (capex) down below expected cash flow rather than borrow more to fund capex.”

The increase in 2016 equity offerings mostly resulted from the large increase in deal amount raised by companies in the upstream, midstream and oilfield services (OFS) sectors, which kept 2016 equity deal amount raised close to the levels seen in 2015, PLS said. The largest equity issuance increases over 2015 were in the upstream (69%) and OFS (343%) sectors.

“Decreased liquidity in the bond markets was a result of investors becoming more risk-averse in a low commodity price environment,” PLS said. “That affected profit margins and increased the credit risk of energy-related companies, which had an impact on funds raised through bond offerings. This decrease was met with a healthy increase in equity issuances, a 36% surge in amount raised over that in 2015.”

Of the total offerings last year, $53 billion were equity offerings and $133 billion were bond issuances.

Equity financing activity in the upstream sector surged 69% from 2015, while “traditional” equity issuers in the midstream/master limited partnership (MLP) sector saw reduced offerings.

“The expectation of lower oil prices at the beginning of the year, coupled with the increase in Permian Basin M&A and drilling activity, pushed companies in the upstream sector to raise a significant amount of equity in 2016,” PLS said.

All together, there were 80 equity deals in the upstream sector last year at $31.7 billion and 70 bond transactions at $46 billion.

Only six initial public offerings across the upstream and oilfield services arena were launched during 2016, while virtually no MLPs went public last year.

“Oil price accounts for much of the deal market volatility as it began descending from July 2014 highs of $100/bbl-plus and accelerated in November 2014,” when the Organization of the Petroleum Exporting Countries (OPEC) opened the taps on production to gain market share, PLS said.

“This resulted in prices plummeting to a low of $27/bbl in February 2016. Two years after OPEC’s attack on oil prices began, both OPEC and non-OPEC countries agreed to cut production beginning Jan. 1 — a decision that is expected to further boost oil prices this year.”

The oil and gas deal markets “are well supplied with inventory, and capital is available for the right deal,” PLS said. “At the beginning of 2016, over $100 billion of dry powder private equity capital was available. Much of this remains available a year later, supplemented by a receptive Wall Street quickly supporting overnight secondary equity raises to fund the largest deals.”

PLS expects additional capital to come to the forefront as the IPO markets open up.

“Already we have seen two IPOs, 17 follow-on offerings and 13 bond offerings in the beginning of 2017. An expected rise in oil prices, increased U.S. M&A activity and private equity funds looking to monetize unrealized investments, the outlook for energy capital markets activity in 2017 looks promising.”