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Wall Street Cash Infusion Fuels Frenzy of Oil-Drilling M&A

All of a sudden, the oil industry is hot. And Wall Street's money is fueling the fire.

Investors are snapping up stock offerings from once-beleaguered energy producers, while U.S. banks ply them with billions of dollars of new loans. The combination is giving drillers a fresh source of cash to buy properties -- even at prices that have almost doubled in the past year.

The dynamic was crucial to PDC Energy's (PDCE) agreement this week to buy about 57,000 acres in the oil-rich Permian Basin of West Texas for $1.5 billion. The Denver-based company plans to pay for the assets with stock sales and debt financing; JPMorgan Chase (JPM) , PDC's financial adviser on the acquisition, also provided loan commitments to ensure the company has sufficient liquidity to close the deal.

Such a...