Shares of Santos Ltd (ASX: STO) have come under further selling pressure today, losing another 8.1% to trade at $3.95 after hitting a low of $3.80 earlier in the session. It comes after a 27.2% plunge on Thursday, before which the shares traded for $5.91 each.
So What: Shares of the energy producer reopened for normal trade on Thursday from a trading halt after revealing a $3.5 billion capital raising to help ease its debt pile.
A little over $1 billion would be raised the sale of its interest in the Kipper gas field ($520 million) and a private placement ($500 million), while $2.5 billion would be raised via a fully underwritten accelerated entitlement offer.
On Thursday however, the company confirmed a shortfall in the take-up by institutional investors (86%), despite the shares on offer being heavily discounted. At the same time, oil prices have continued to decline which will likely add even more strain to the company's revenues and cash flows, as well as its overall earnings capacity.
Other energy producers, including Woodside Petroleum Limited (ASX: WPL) and Senex Energy Ltd (ASX: SXY), have also fallen sharply today as a result.
Now What: While investors will clearly be disappointed with the company's performance, many will also be questioning why Santos didn't entertain a $7.14 billion ($6.88 per share) offer made by the Bermuda-based Scepter Partners recently. Santos said the offer was "opportunistic" and undervalued its assets, but I'm sure most investors would tend to disagree today.
