2016 M&A Overview

As oil and gas prices remained low, deal volume picked up in the beginning of 2016 as companies were forced to sell assets in order to quickly generate cash to pay off debt and avoid bankruptcy. As the year continued, M&A activity increased and total deal value at the end of 2016 doubled that of 2015.

EOG/Yates Merger: A Closer Look at the Acquisition

On September 6, 2016 EOG Resources (EOG) announced the acquisition of Yates Petroleum (Yates) for approximately $2.4 billion dollars, by our calculations. In this post, we take a closer look at the deal.

Captain Obvious: Location is Key in E&P

Deal activity, while quiet in the first quarter of the year, has picked up significantly in the last four months, especially in the Permian Basin. Pioneer has been one of the more active companies making investments in the play, but why would they in such a bleak energy climate?

Bankruptcy: An Overview Part 2

From January through May of this year, 39 E&P companies and 31 oilfield services companies had to file for bankruptcy. This post is the second of three aimed at helping those companies and any others who may face bankruptcy in the future to understand the valuation-related aspects of Chapter 11 restructuring. In the first post, we highlighted two reorganization requirements tied to valuation. Here we will explore the consequences of the first of those requirements: The plan should demonstrate that the economic outcomes for the consenting stakeholders (creditors or equity holders) are superior under the Chapter 11 proceeding compared to a Chapter 7 proceeding, which provides for a liquidation of the business.

M&A Activity in the Bakken

In order to survive, when producing is no longer economically feasible, production companies are selling “non-core” assets to generate the cash. M&A activity of Bakken assets has slowed in 2016, but most Bakken assets are selling for heavy discounts making them attractive to buyers. This posts discusses some of these transactions in light of the current environment.

Bridging Valuation Gaps: Part 3

This is the third and final post in a series aimed at helping E&P companies to navigate the sale of non-core assets and bankruptcy by examining how option pricing, a sophisticated valuation technique, can be used to understand the future potential of the assets most affected by low prices, PUDs and unproven reserves. In this post, we delve into the specifics of adapting option pricing from shares of stock to oil and gas, highlighting some of the challenges and key steps of the process.

Bridging Valuation Gaps: Part 2

This is the second in a series of three blog posts aimed at helping E&P companies to navigate the sale of non-core assets and bankruptcy by examining how option pricing, a sophisticated valuation technique, can be used to understand the future potential of assets most affected by low prices, PUDs and unproven reserves. In this second installment we explain the general idea behind option pricing and why it may be more suited to a low price environment than traditional DCF models. Part three will then cover some of the issues that arise when using the option pricing method to value oil and gas companies’ assets.

Bridging Valuation Gaps: Part 1

Due to a precipitous drop in oil prices since June 2014, oil exploration and production companies in the US have struggled to pay their debts and in many cases have had to file for bankruptcy. This is the first post in a three part series examining how option pricing, a sophisticated valuation technique, can be used to understand the future potential of the assets most affected by low prices, PUDs and unproven reserves.