Mercer Capital is pleased to announce the release of the 2025 Energy Purchase Price Allocation Study. This study researches and observes publicly available purchase price allocation data from companies primarily contained in one of the four sub-sectors of the energy industry: (i) exploration & production; (ii) oilfield services; (iii) midstream; and (iv) downstream. This study is unlike any other in terms of energy industry specificity and depth.
For this week’s post, we’re highlighting our whitepaper, “How to Value Your Exploration and Production Company.” The piece provides a comprehensive overview of the key factors that drive value in the upstream oil and gas sector, offering readers a clear framework for understanding how operational performance, reserve economics, and commodity pricing influence company worth. It also explores core energy valuation methodologies—including cash flow analysis, reserve-based approaches, and market benchmarking—to help executives, investors, and advisors navigate the complexities of assessing value in a constantly evolving energy market.
Appalachian production improved modestly over the past year, with steady drilling activity and enhanced infrastructure driving a 6% increase despite subdued natural gas prices. The Mountain Valley Pipeline’s completion provided much-needed takeaway capacity, improving flow reliability and narrowing basis differentials. Public operators like EQT and Range Resources led performance gains, reflecting a stabilizing investment environment as the basin moves toward 2026 with firmer fundamentals and growing exposure to LNG export opportunities.
Appalachian Basin deal activity may be quieter, but strategic bolt-ons and creative financing are redefining how value is built in a cautious market.
Equity markets reward growth, but lenders value discipline. Viewing upstream performance through a credit analyst’s lens reveals how scale, costs, reserves, and prudent leverage drive both credit strength and enterprise value.
At Hart Energy’s 2025 A&D Strategies and Opportunities Conference in Dallas, two central themes emerged: the maturation of Tier 1 U.S. shale inventory and diverging dynamics between private and public players in dealmaking. The conference highlighted the evolving dynamics of the U.S. upstream oil and gas market. With Tier 1 shale assets maturing, private and public participants are behaving differently, and deal strategies have become more selective. Read more in this week’s post.
The One Big Beautiful Bill Act (OBBB) brings sweeping changes to the U.S. oil and gas industry. By revising tax rules, restoring leasing predictability, and lowering royalty rates, the Act reshapes project economics and carries significant implications for valuation and long-term investment.
Mercer Capital has its finger on the pulse of the minerals market. The most recent Mineral Aggregator Valuation Multiples Study is now available.
Q2 2025 earnings calls reflected an industry still guided by discipline but open to opportunity. OFS providers and E&P companies alike reiterated their focus on returning capital to shareholders and preserving balance sheet strength, while also pointing to selective international and offshore growth initiatives. The result is a sector cautious about near-term pricing and activity levels in North America, yet strategically positioning for selective long-term expansion. Read more in this week’s post.
The Dallas Fed Q2 Energy survey highlighted the growing uncertainty and continued pessimism in management sentiments across the sector. Given the concerns shared about the future of the oil and gas markets, it is more important than ever for a potential seller to be able to provide potential buyers with a clear picture of the company’s capacity for generating cash flows. In this week’s post, we highlight the value of a Quality of Earnings (QofE) analysis in the transaction process.
The Q2 2025 issue of Mercer Capital’s Exploration and Production Newsletter focuses on the Permian. The Permian basin continues to serve as the centerpiece of the U.S. shale revolution. However, the basin will face challenges in the near future as rising water and associated gas content are contributing to increased production costs, leading to more cautious drilling plans for basin operators.
Americans have been and continue to be hungry for energy, in any effective form they can get it, renewable or not. While a majority of Americans still prioritize renewables in energy policy, a shift is taking place, mostly among younger Republican and Republican-leaning individuals, according to a recent Pew Research Study. In this week’s post, we detail how this has been changing since the end of Trump’s first term in office and what the future may hold for renewable energy.
The economics of oil and gas production vary by region. Mercer Capital focuses on trends in the Permian, Eagle Ford, Haynesville, and Marcellus and Utica plays. The cost of producing oil and gas depends on the geological makeup of the reserve, the depth of the reserve, and the cost of transporting the raw crude to market. We can observe different costs in different regions depending on these factors. In this week’s post, we take a closer look at the Permian.
While large-scale upstream M&A has dominated industry headlines, the mineral and royalty space has quietly sustained deal momentum over the past year. From high-profile corporate mergers to strategic bolt-ons and capital recycling plays, activity in the Permian Basin remains robust. Publicly traded royalty platforms are leveraging both equity and debt to consolidate top-tier assets, signaling a maturing market where scale, structure, and selectivity are reshaping the investment landscape.
Oil and gas analysts use many different metrics to explain and compare the value of an oil and gas company, specifically an exploration and production (E&P) company. The most popular metrics (at least according to our eyeballs) include EV/Production, EV/Reserves, EV/Acreage, and EV/EBITDA(X). In this post, we will dive into the EV/Production metric, and explore its most popular uses.
On June 3, 2025, Viper Energy, a subsidiary of Diamondback Energy, Inc., announced its plan to acquire Sitio Royalties in an all-stock transaction valued at approximately $4.1 billion. The acquisition includes Sitio’s roughly 34,300 net royalty acres, 25,300 of which are concentrated in the Permian Basin. The Viper-Sitio merger represents a notable shift in strategy within a traditionally fragmented sector. It signals a move toward greater scale, operational leverage, and investor confidence in the royalty business model.
The energy industry is at a critical point, where producers must not only meet the ever-growing global energy demand resulting from population growth, industrialization, and the increasing electrification of uses, but also adapt to ever-changing environmental regulations and shifting societal expectations related to sustainable practices.
On June 4, 2025, Hart Energy hosted its annual Energy Capital Conference, which brought together capital providers and industry executives for an update on the funding that drives the oil and gas segment of the energy industry. In this week’s post, we recap how the conference reflected this crossroads in the industry and summarize key topics, including capital allocation and the outlook for M&A and LNG.
Mercer Capital has its finger on the pulse of the minerals market. The most recent Mineral Aggregator Valuation Multiples Study is now available.
Amid the uncertainty in oil markets, for the past year or so, optimism and valuation metrics for natural gas producers have steadily been rising. According to data from Mercer Capital’s quarterly Value Focus: Exploration and Production, reports whereas a year ago show cash flow multiples (or sometimes referred to as EBITDAX in the oil and gas industry) for both oil and gas producers tended to centralize around four (4) to five (5) times, lately, publicly traded gas producers have EBITDAX multiples in the low- to mid-teens, while predominately oil producing companies’ multiples have dropped.
This has been a dramatic change in the past year compared to the industry’s history. While onshore producers of oil and gas have many similar operational and economic traits, such as the shrinking inventory of top tier wells, this decoupling is representative of a fundamentally different outlook for the future of each commodity.
Choosing an industry expert to value your oil & gas company has several distinct benefits that stem from a deep understanding of the sector’s unique dynamics, trends, and complexities. Selecting a valuation expert to assess your oil & gas company brings a distinct set of advantages rooted in their specialized training, adherence to recognized standards, and a focused approach to valuation. So, which should you choose?
In this post, we make the case for both and provide a solution to this question.
Following our post last week in which we covered the latest changes and trends facing oilfield services (OFS) companies, this week we focus on how to value these companies. Understanding the value of an oilfield services (OFS) company is by its very nature a complex matter. Having a firm grasp on the many similarities and distinctions between these businesses is crucial for performing valuations. In our whitepaper, Understanding Oilfield Services Companies & How to Value Them, we provide invaluable guidance in regard to these aspects of the OFS industry.
In our Energy Valuation Insights from recent weeks, we addressed the challenges facing U.S. O&G drillers and covered the uncertainty in the overall O&G sector due to shifting world trade patterns. This week, we look at some of the same themes and how they are affecting in the Oilfield Services (OFS) industry. In particular, we cover changes related to the recent recovery in activity level, the influences of technological advances, the push for energy independence, and expectations going forward.
The Q1 2025 issue of Mercer Capital’s Exploration and Production Newsletter focuses on the Eagle Ford. Despite a notable rig count decline, Eagle Ford production generally remained about flat over the twelve months ended March 2025. Modestly declining commodity prices combined with the formation’s falling rig count pushed the region’s benchmark groups’ stock prices into single-digit declines over the review period. Although M&A activity in the Eagle Ford remained minimal, with only two material transactions over the last twelve months, the Eagle Ford remains the most fragmented of the major unconventional plays and provides substantial opportunities to build via acquisition.
Oil markets and energy companies are wrestling with understanding changes in domestic and international energy markets. As company outlooks become cloudier, uncertainty is on the rise. This has been developing for several weeks now, with some early indications showing that executives and investors don’t quite know how to respond yet. It appears it is going to take time for oil companies to figure out what to do next.
