industry observers panel: hot spot still sizzles...4 recent trends in permian basin valuations...
TRANSCRIPT
Presenter: Andy Taurins
Industry Observers Panel: Hot Spot Still Sizzles
November 11th, 2014
2
Lantana Energy Advisors
As a full service energy advisory arm of STRH, Lantana provides a complete transaction process for companies interested in acquiring or divesting oil and gas assets,
from initial consultation to closing
§ Initial Asset Review
§ Comprehensive Asset Valuation
§ Current Market Overview
§ Market Penetration & Strategic Buyer Profiling
§ Physical & Virtual Data Room Presentations
§ Bid Evaluation, PSA Negotiations, Due Diligence & Closing
David Nini Managing Director
713.851.4900 [email protected]
Andy Taurins Managing Director
832.282.4551 [email protected]
Jim Unverferth Managing Director
713.898.8154 [email protected]
Melinda Faust Director
512.296.4653 [email protected]
Carla Tharp Director
281.639.7205 [email protected]
GeoMet, Inc.
CBM – West Virginia and Virginia
May 2014
Saxet Oil Corporation
Eagle Ford ORRI Assets
December 2013
GeoMet, Inc.
CBM – Black Warrior & Cahaba
June 2013
Constellation Energy Group
CBM – Black Warrior
February 2013
Archon Resources LLC
East Texas / Oak Hill
August 2014
Flint Oak Energy LLC
South Texas / Willamar Field
July 2014
Platform Services Lantana Energy Advisors - Key Team Members
Select Sold Asset Packages
Website: www.lantanaog.com Phone: 713.426.9001
Preston Exploration LLC
East Texas / Cotton Valley
December 2013
SunTrust Robinson Humphrey – Oil & Gas Team
Stirling Bomar Director
404.926.5914 [email protected]
Jim Warren Head of Oil & Gas
Investment Banking 404.439.7465
BJ Green Director
404.926.5219 [email protected]
3 3
Map of Permian Basin The Permian Basin has distinct areas with different features and characteristics, which drive differing valuation metrics across the basin
4 4
Recent Trends in Permian Basin Valuations Permian Basin valuations has significantly increased in the last 18 to 24 months with recent acreage deals peaking [at close to $40,000 / net acre]
Criteria for Data Pull
§ Deals with disclosed values greater than $25 million
§ Applied $60,000 / flowing boe to derive implied acreage valuations for assets with material production components
§ Source: Herolds
$2,423
$6,651 $7,787
$13,173 $18,535
$24,260
$86,524
$113,428 $133,907 $126,717 $130,007
$210,852
-
$50,000
$100,000
$150,000
$200,000
$250,000
-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2009 2010 2011 2012 2013 YTD 2014
$ / boe/d$ / a
cre
Implied Acreage Valuation Total Production Valuation
Deals in Data Set 14 19 22 20 18 24Total Deal Value ($MM) $4,525 $10,918 $5,134 $11,063 $7,656 $15,678
5 5
Tier 1 Permian Transactions Transaction Proved Daily
Annc. Value Reserves Production Net R / P Implied Value Adj. AcreageDate Buyers Sellers County ($MM) (MMBoe) (MBoe/d) Acreage Ratio $ / Pvd Boe $ / Boe/d Value (1)
10/29/2014 American Energy Partners LP Undisclosed company(ies) Midland $726 - 1.4 27,000 - - $518,571 $23,778
10/3/2014 Fleur de Lis Energy LLC; KKR Linn Energy, LLC Midland, Ector 350 - 4.6 7,200 0.1 - 76,087 10,278
9/29/2014 Encana Corporation Apollo;Athlon Energy Inc. Howard, Midland, Reagan, Andrews, Glasscock
6,877 19 30.0 140,000 0.2 361.94 229,230 36,263
9/2/2014 Callon Petroleum Undisclosed priavte company(ies) Midland, Andrews, Martin, Ector 213 4 1.5 3,862 - 53.15 145,119 32,289
8/13/2014 Athlon Energy Eagle Energy Trust Midland, Martin, Glasscock 382 11 3.0 6,450 10.0 34.73 127,333 31,318
7/25/2014 RSP Permian, Inc Undisclosed Glasscock 259 22 1.1 6,650 54.5 11.77 234,177 28,968
7/21/2014 Diamondback Energy Undisclosed Midland, Glasscock, Reagan, Upton 538 5 2.2 13,140 6.6 103.44 247,584 31,021
4/10/2014 Parsley Energy LLC Undisclosed company(ies) - 133 - - 4,867 - - - -
4/8/2014 Athlon Energy Inc Hibernia Holdings, Piedra Energy II Andrews, Martin, Upton, Midland, Glasscock
873 31 4.8 23,500 17.7 28.16 181,875 24,894
3/27/2014 Parsley Energy LLC Pacer Energy Ltd. - 165 25 0.9 1,977 0.3 6.61 191,986 57,481
2/20/2014 Diamondback Energy Undisclosed Martin 114 3 0.6 1,860 13.6 41.56 205,946 43,548
2/18/2014 Diamondback Energy Undisclosed Martin 174 4 1.6 2,830 7.2 41.53 108,750 27,562
1/24/2014 Athlon Energy Undisclosed Midland, Upton, Martin, Andrews 88 3 0.8 5,650 10.6 30.34 117,333 7,611
1/7/2014 Institutional Investors RSP Permian, LLC Midland, Dawson, Martin, Ector, Andrews
385 21 2.6 7,908 0.1 18.53 148,781 29,045
12/13/2013 BreitBurn Energy Partners L.P. CrownRock LP - 282 40 2.9 - 0.2 7.05 97,241 -
12/9/2013 QEP Resources EnerVest Ltd. Martin, Midland 950 47 6.7 26,520 19.2 20.21 141,791 20,664
Tier 1 Mean $58.39 $184,787 $28,909
Tier 1 Median $30.34 $148,781 $29,007
Overall Mean $55.00 $170,244 $24,298
Overall Median $29.25 $148,781 $25,610
(1) Valued production independently at $60,000 / flowing boe
6 6
Tier 2 Permian Transactions Transaction Proved Daily
Annc. Value Reserves Production R / P Implied Value Adj. AcreageDate Buyers Sellers County ($MM) (MMBoe) (MBoe/d) Net Acreage Ratio $ / Pvd Boe $ / Boe/d Value (1)
10/24/2014 BreitBurn Energy Partners L.P. Antares Energy Limited Howard $123 - 0.6 3,700 - - $204,522 $23,436
10/6/2014 Harbinger Group Inc. EXCO Resources, Inc. - 205 - 4.2 - 14% - 49,289 -
8/25/2014 Parsley Energy Undisclosed Reagan 252 - 1.8 5,470 - - 140,000 26,325
6/9/2014 American Energy Partners Enduring Resources, LLC Reagan, Irion 2,500 - 16.0 63,000 - - 156,250 24,444
4/30/2014 EP Energy Corporation Undisclosed Crockett, Reagan 153 - 1.0 37,000 - - 153,000 2,514
4/1/2014 Laredo Petroleum, Inc. Undisclosed company(ies) - 203 - - 9,741 - - - -
3/31/2014 RSP Permian, Inc. Undisclosed company(ies) Dawson, Martin, Glasscock 75 - - 5,316 - - - -
12/31/2013 Rosetta Resources, Inc. Undisclosed company(ies) Reeves 85 - - 5,078 - - - -
Tier 2 Mean - $140,612 $19,180
Tier 2 Median - $153,000 $23,940
Overall Mean $55.00 $170,244 $24,298
Overall Median $29.25 $148,781 $25,610
(1) Valued production independently at $60,000 / flowing boe
7 7
Permian Basin Heat Map
8 8
Tier 3 Recent Permian Transactions
9 9
3_D Map of the Permian and Delaware
10 10
Permian Stacked Pay
Sorurce: W&T Offshore
Multiple stacked pays are the difference
§ $40,000/acre really looks like $10,000/acre if 4 productive benches are present
§ Tier 1 – 4 Benches
§ Tier 2 – 2 Benches
§ Tier 3 – 1 Bench
§ All benches assumed to be equal
11 11
Permian Basin Returns Analysis
Midland Basin
Midland Basin
56.2% 52.8%
32.8% 28.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
A B A B
$100 / Bbl $75 / Bbl
46.3% 45.6%
26.4% 24.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
A B A B
38.6% 39.6%
21.6% 20.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
A B A B
27.6% 30.4%
14.6% 15.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
A B A B
51.3%
79.4%
32.3%
46.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
C D C D
44.9%
69.6%
27.9%
40.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
C D C D
39.5%
61.4%
24.2%
35.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
C D C D
31.2%
48.5%
18.6%
27.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
C D C D
$100 / Bbl $75 / Bbl $100 / Bbl $75 / Bbl
$100 / Bbl $75 / Bbl $100 / Bbl $75 / Bbl
$100 / Bbl $75 / Bbl
$100 / Bbl $75 / Bbl
$100 / Bbl $75 / Bbl
Legacy Acreage Tier 3 Acreage Tier 2 Acreage Tier 1 Acreage
Legacy Acreage Tier 3 Acreage Tier 2 Acreage Tier 1 Acreage
12 12
Key Takeaways
§ Permian Basin properties continue to shine even with lower commodity prices
§ Multiple stacked pays contribute to robust economics
§ Continually improving completions are leading to better EUR’s
§ Returns may be lower, but the area will continue to attract capital
§ Fringe acreage suffers most in a lower commodity price environment
13
Important Disclosures This presentation is for informational purposes only and is being furnished on a confidential basis. By accepting this information, the recipient agrees that it will use the information only to evaluate its potential interest in the strategies described herein and for no other purpose and will not divulge any such information to any other party.
This presentation does not constitute a commitment to lend money, underwrite any proposed transaction, purchase securities or other assets, provide financing, arrange financing, or provide any other services. SunTrust Robinson Humphrey, Inc. and its representatives and affiliates make no representation and have given you no advice concerning the appropriate regulatory treatment, accounting treatment, or possible tax consequences of the proposed transactions described herein. Prior to entering into any proposed transaction, you should determine, without reliance upon SunTrust Robinson Humphrey, Inc. or its representatives or affiliates, the economic risks and merits, as well as the legal, tax and accounting characteristics and consequences, of the transaction and that you are able to assume these risks. These materials should not be relied upon for the maintenance of your books and records or for any tax, accounting, legal or other purposes.
This presentation does not constitute an offer or recommendation to enter into any “swap” or trading strategy involving a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act. Any such offer or recommendation, if any, will only occur after we have received appropriate documentation from you regarding whether you are qualified to enter into a swap under applicable law. Nothing in this document constitutes a “Research Report” within the meaning of CFTC Regulation 23.605(a)(9).
All materials, including proposed terms and conditions, are indicative and for discussion purposes only. Finalized terms and conditions are subject to further discussion and negotiation and will be evidenced by a formal written agreement. Except as required by applicable law, we make no representation or warranty, express or implied, to you or to any person as to the content of the information contained herein. Opinions expressed herein are current opinions only as of the date indicated. Any historical price(s) or value(s) are also only as of the date indicated. We are under no obligation to update opinions or other information.
In connection with Treasury Regulation Section 1.6011-4, it is our mutual intent that the tax structure and tax treatment of the transactions contemplated by this presentation are not confidential and that notwithstanding anything herein to the contrary that each of us (and our employees, representatives and agents) may disclose to any and all persons, without limitation of any kind, the tax structure and tax treatment of the transactions contemplated herein.
SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member, FINRA and SIPC.
Debt and equity underwriting, trading, research and sales, loan syndications, municipal securities trading and sales, and mergers and acquisitions advisory services are offered by SunTrust Robinson Humphrey, Inc.
Cash management, loans and loan related products, foreign exchange, risk management products and services and agency services are offered by various non-broker dealer subsidiaries of SunTrust Banks, Inc.
©2014 SunTrust Robinson Humphrey, Inc., member, FINRA and SIPC. SunTrust Robinson Humphrey is a federally registered service mark of SunTrust Banks, Inc.