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Current Events

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June 6, 2025 Valuation Issues

Upstream Natural Gas Valuations: A Big Year

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.

May 9, 2025 Special Topics

Oilfield Services Update for 2025

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.

April 25, 2025 Special Topics

Uncertainty Rules the Day

Oil Markets Bewildered as World Trade Patterns Shift

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.

April 4, 2025 Domestic Production

Challenges for U.S. Drilling Amid Tariff Uncertainties

As in most other industries, President Trump’s tariff policy has created uncertainties for oil and gas businesses, where there is reduced confidence in the stability of commodity prices and the economics for drilling. On April 2nd, Trump announced a 10% across-the-board tariff and additional tariffs on China, the European Union, and Japan. Although energy commodities are exempted from these tariffs, U.S. hydrocarbons are still subject to risks from likely retaliatory tariffs and a slowdown in global economic growth. Ultimately, drilling and capital spending decisions are more challenging and complex for U.S. producers, which can be expected to keep their drilling spending restrained and production growth muted in the near term. 

March 21, 2025 Domestic Production

U.S. LNG in 2025

The Future is Bright, Though with Potential Headwinds

Expectations for the LNG industry in 2025 were modestly positive before the November 2024 U.S. elections but are notably more robust with the transition from the decidedly pro-green/renewable, anti-carbon energy Biden administration to the decidedly pro-American energy dominance Trump administration. However, as always true of domestic commodity markets subject to international market influences, the outlook for the U.S. LNG industry in 2025 is tempered by a number of potential domestic, international, and geopolitical pressures that could hamper actual results relative to expectations. We take a look at the future of U.S. LNG in this week’s post.

February 28, 2025 Domestic Production

Themes from Q4 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q4 2025 earnings calls of Upstream and OFS companies, noting a focus on optimizing existing assets vs. M&A, capital allocation, and how companies are reacting to tightening supply. We examine some notable quotes from recent earnings call transcripts to gain insights into how industry leaders are navigating current challenges and positioning themselves for the future in an evolving energy landscape.

February 14, 2025 Special Topics

The Oil & Gas Industry is Pumped Up

NAPE 2025 Recap

Mercer Capital attended the NAPE (North American Prospect Expo) summit on February 5th and 6th, 2025, in Houston, Texas. More than 12,000 primarily upstream oil and gas industry professionals from a wide cross-section of disciplines attended the conference to discuss business opportunities, explore investments, and sharpen their knowledge base. In this week’s post, we focus on four primary themes that emerged from our attendance at various panel discussions featuring operational and financial industry participants as well as policymakers from Washington, D.C. 

February 7, 2025 Domestic Production Special Topics

The Uinta Basin Resurgence

The Uinta Basin is a geological formation located in northeastern Utah that extends into Western Colorado on its easternmost front where it is bound by the Piceance Basin. The Uinta Basin is rich in oil and gas reserves and is a stacked formation with pay zones ranging from around 1,300′ to 18,000′ in depth. Major oil discoveries led to the basin’s first significant development in the 1940s. With the rise of hydraulic fracturing (fracking) and horizontal drilling, the basin’s relevance has resurged, making it a hotspot for tight oil development and a significant contributor to U.S. oil and gas production. We explore the Uinta Basin’s resurgence in this week’s post.

January 31, 2025 Domestic Production Valuation Issues

The Latest in Natural Gas Valuations

Continued Optimism for Global Demand Buoys Multiples

Natural gas markets continue an optimistic trend towards greater demand to meet a U.S. supply glut. The incoming Trump Administration has promised to pull back regulatory restraints and unleash the industry to “drill baby drill.” However, when it comes to natural gas, there is already plenty of supply; the question is, can that supply become more portable to meet global (instead of regional) demands? We explore this question and a potential answer in this week’s post.

January 17, 2025 Domestic Production

2025 U.S. Oil Outlook

Don’t Count On A "Drill Baby Drill" Mentality

The November election brought optimism to many oil producers who felt hamstrung by the Biden Administration’s policies. However, administrations can only do so much when it comes to global supply and demand dynamics. In fact, they can usually do little in the big picture; and the big picture is that there is probably going to be more supply coming online in 2025 than demand to meet it. Therefore, U.S. upstream producers are not planning on blowing their budget on aggressive drilling plans, no matter what Trump says, especially considering the lukewarm pricing environment that the market foresees. In addition, the U.S.’ shale dominance may be headed towards inevitable decline. We consider the 2025 U.S. oil and gas outlook in this week’s post.

November 21, 2024 Domestic Production

Themes from Q3 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q3 2024 earnings calls of Upstream and OFS companies, noting a focus on technological efficiency, optimized capital allocation, and expectations for natural gas demand in the long term. We examine some notable quotes from recent earnings call transcripts to gain insights into how industry leaders are navigating current challenges and positioning themselves for the future in an evolving energy landscape.

November 8, 2024 Mineral and Royalty Rights

National Association of Royalty Owners (NARO) National Convention

This year’s National Association of Royalty Owners (NARO) National Convention was held in Houston and Mercer Capital’s Bryce Erickson, ASA, MRICS and David Smith, CFA, ASA had the privilege of attending.  NARO has represented the interests of oil and gas royalty owners for over 40 years, seeking to support, advocate and educate for the empowerment of mineral and royalty owners. In addition to offering beneficial education opportunities, the event served as a valuable networking opportunity, connecting mineral and royalty owners with fellow owners as well as professional service providers specific to these assets. In this week’s post, we recap the event and provide valuable educational resources for our readers.

August 23, 2024 Domestic Production

Themes from Q2 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q2 2024 earnings calls of Upstream and OFS companies, highlighting the significance of this quarter’s themes across the entire sector. The main themes discussed on these calls include strong international demand for U.S. oil and gas, domestic challenges from natural gas prices, and technological advances in drilling and operational efficiency. We unpack these trends in this week’s post.

June 14, 2024 Mergers, Acquisitions, & Divestitures Permian Basin

Large Acquisitions Dominate the Permian M&A Landscape

Transaction activity in the Permian Basin declined over the past 12 months, with the transaction count decreasing 53% to nine deals, a decline from the 19 deals that occurred over the prior 12-month period. This level is also well below the 21 deals that occurred in the 12-month period ended mid-June 2022 and the 27 transactions that closed during the same time period in 2021. While the pace of M&A activity in the Permian has waned relative to prior years, deal size is making up for lower deal volume. But despite fewer “big game” targets remaining, the Permian Basin still offers resources to companies seeking to maintain high-quality reserve inventory.

May 24, 2024 Domestic Production

Themes from Q1 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

In our prior earnings call post, Themes from Q4 2023 Earnings Calls, we touched on the global focus of both the Upstream and OFS segments and the persistent drive to optimize efficiency in well operations and services with technological advancements, durable inventory, and more. This week, we explore the Q1 2024 earnings calls of upstream and OFS companies, highlighting the appearance of this quarter’s themes across the entire sector: dividends and buybacks and a boost to the gas market.

May 17, 2024 Special Topics

Oilfield Water Industry Update, Trends, and the Future

The oilfield water industry (OFW, or midstream water) continues to grow in importance within the general upstream energy industry.  So much so that while historically considered part of the Oilfield Services Industry (OFS), midstream water is now considered its own industry within the upstream space, separate from the more general OFS.  In this week’s Energy Valuation Insights blog, we explore the current status, trends, and expectations for the future of midstream water.

May 10, 2024 Eagle Ford Shale Mergers, Acquisitions, & Divestitures

SilverBow’s Shareholder Brawl

It’s an election year, and the battle is on. SilverBow Resources, a publicly traded oil and gas company operating in South Texas’ Eagle Ford shale, is wrapped up in a big conflict with some of its own shareholders. Kimmeridge Energy Management, both a large shareholder and a rival operator in the Eagle Ford, has proposed a merger (which it, at least temporarily, withdrew last month), and now is proposing several new board members in a proxy battle. The primary question centers on the direction of SilverBow’s value enhancement strategy. However, it appears this strategy hinges, in part, on its debt position, and dividend policy. Management has one idea on how this should go; Kimmeridge clearly has another.

May 3, 2024 Domestic Production Special Topics

The Inside “SCOOP”

The SCOOP/STACK is a significant oil and gas play found in the Anadarko Basin of Oklahoma. Historically, the Anadarko Basin has been a prolific area for oil and gas extraction. It spans approximately 70,000 square miles across Western Oklahoma, the Texas Panhandle, and parts of Southwestern Kansas and Southeastern Colorado. The basin’s geology features some of the thickest and highest-quality shale reservoirs in the United States, making it an attractive site for drilling and production. Given that fact pattern, it might surprise some to learn that activity in the SCOOP/STACK has been sluggish, to say the least, in recent times.

November 9, 2020 Bankruptcy Special Topics

Solvency Opinions Explained

What a Solvency Opinion Is and What It Addresses

With the rise of corporate bankruptcies, some leveraged transactions that occurred pre-COVID are going to be scrutinized. This post considers solvency opinions conceptually including four questions every solvency opinion addresses.

October 12, 2020 Bankruptcy Special Topics

Oilfield Services in 2020

Fork in the Road: Survival or Bankruptcy?

In this post, we explore some of the many factors that play into making it more (or less) likely that an oilfield service participant will survive an industry downturn intact, or succumb to market pressures and enter into bankruptcy.

October 2, 2020 Special Topics

Oil & Gas Industry Optimism Contained with Political Uncertainty Lying Ahead

Q3 2020 Macro Review

In this post, we will examine the macroeconomic factors that have affected the industry in the third quarter and peek behind the curtain on what the remainder of the year might hold.

September 16, 2020 Bakken Shale Mergers, Acquisitions, & Divestitures

M&A in the Bakken

Immense Drop in Deal Activity Due to COVID Concerns

Over the past several years, the Bakken has generally had much lighter acquisition and divestiture activity than other major basins in the United States.  Given that deal activity across the energy sector has dropped an immense 42.7% over the past year, acquisition and divestiture activity has dropped even further in this basin over the past year. Observed deal activity has largely been the result of Northern Oil and Gas growing its production base in the area during the past several years.

September 8, 2020 Special Topics

Themes from Q2 2020 Earnings Calls

Part 2: E&P Operators

The oil & gas industry experienced a volatile path to price stability as COVID-19 and the Saudi-Russia price war took a toll on supply and demand.  The road to recovery was apparent late in the quarter and was driven by supply cuts from OPEC+, curtailments by U.S. producers, and an increase in demand.  In this post, we capture the key takeaways from E&P operator second quarter 2020 earnings calls. 

September 1, 2020 Bankruptcy

Oil Frackers Are Breaking Records Again – In Bankruptcy Court

This year has beaten down America’s oil producers. It started bad, with the Russian-Saudi battle for market share, then cascaded into terrible as the COVID pandemic gutted petroleum demand and sent oil prices down to an unheard of -$38 (negative!) per barrel. Those with the weakest hands have taken shelter in bankruptcy court, where it has been a busy six months.