Hart Energy LIVE’s America’s Natural Gas Conference 2023
The recent America’s Natural Gas conference shed light on crucial themes in the energy sector, highlighting an increasing demand for liquefied natural gas (LNG) amid challenges like insufficient pipeline and storage infrastructure, which poses a substantial hurdle to meeting the soaring need both domestically and internationally. Noteworthy initiatives, such as Mexico Pacific’s strategic LNG facility, aim to bridge infrastructural gaps by delivering responsibly sourced natural gas from the Permian Basin to Asian markets, while also focusing on a sustainable and strategic location to optimize shipping and pricing. The discourse at the conference also underscored the notable reduction of CO2 emissions with the rising market share of natural gas, as well as the pragmatic and logistical challenges faced by renewable energy endeavors, indicating that a balanced, multi-faceted approach to energy transition is imperative in ensuring reliability, sustainability, and affordability in global energy supply.
Two Foes Are Battling Once More
In the mire of much of the chaotic goings on of the world energy markets and Ukraine over the past year, a lot of things have changed. Uncertainty has ruled the day. Commodity prices have now dropped significantly in the last six months. Yet, between the lines, there is optimism for the upstream industry as profitability and cash flows remain, and the possibility for acquisition premiums for target companies re-emerges in 2023.
Producers have been holding the course towards returns and deleveraging, snubbing pressure from the Biden administration. It has been tempting for producers to ramp up production amid current oil and gas prices. However, with supply chain issues and labor shortages, the appeal has been dampened.
As we await second quarter earnings for publicly traded upstream producers, there are several markers and trends that suggest cash flows and profits will swell. Investment austerity and the recently resulting profits will almost certainly be bandied about on management calls. However, what might not be touted as loudly will be how much longer this can last?
It has been almost a year since crude prices went into the abyss on last April 20th. Markets are fast moving and unforgiving at times, but it appears with $60+ oil prices for 2021, that the upstream business can now start to slow down, look around, and evaluate what direction to go next.
Part 3 | Valuation Considerations
Our previous posts on salt water disposal provided an overview of the sector and detailed the economics of the industry. In this post, we take a deeper dive into specific considerations that are critical to understanding the value of salt water disposal companies.
Saltwater disposal and integrated water logistics companies have attracted a higher proportion of the sparsely available capital flowing into the sector, highlighted by the largest energy IPO of this year: Rattler Midstream LP.
Part 2 | Economics of the Industry
In a prior blog post, we provided an overview of the saltwater disposal (SWD) industry, detailing the source of demand for SWD services, the impact of the shale boom, geographic distribution, site selection, construction, and regulation. We now take a look at the economics of the SWD industry and the trends that impact the economics.
Over the last 12 years the oilfield waste water disposal industry has grown exponentially, both on an absolute basis, and by rank of its importance/size among the oilfield services. This growth has been largely driven by the increased volumes of waste water generated in the production of oil from shale plays. This post discusses the basics of salt water disposal that has become so important given the rise of hydraulic fracturing.
The oil and gas market continued to show improvement in the first quarter of 2018. Positive momentum in production growth in the U.S. continued and prices increased from an average of $55 in Q4 2017 to an average of $63 in Q1 2018. Oil prices are ticking up, domestic production has increased to a 50 year high, and the U.S. is exporting more crude oil than ever before. If you are like me, then you can’t ignore the wary feeling in your gut that makes you ask, “Is it too good to be true?”
“Steady as she goes.” At least that is what I think all captains of most vessels say…except maybe a car. For captains navigating the 2018 oil and gas industry, a repeat of 2017’s relatively calm waters is vocal wish. In this post, we review the past year for insight into what the new year may hold.
You don’t need an expert to tell you that the oil and gas industry has significantly changed over the past three years. Simply looking at crude oil and natural gas prices from 2014 versus today can confirm this. However, understanding how the change in oil prices has affected the value of your oil and gas business is a little more difficult.
Since the start of the oil downturn, more than 120 upstream and oilfield service companies declared bankruptcy. However, as we described in a previous post, the decision to file for bankruptcy did not always signal the demise of the business. Now more prepared, many E&P companies who reorganized are looking to grow.
Artem Abramov, of Rystad Energy, recently published an article in the Oil and Gas Financial Journal comparing shale and offshore drilling. He claims, the “Gulf of Mexico [is] as important as [the] Permian Basin for U.S. oil production” but it has been overlooked since the advancement of shale gas. The EIA reports that offshore drilling accounts for 17% of total domestic crude oil production. So, why aren’t we talking more about oil and gas production from the Gulf of Mexico (GoM)?
2016 was a year to remember and a year to forget for many in the oil and gas industry. On the positive side, energy commodity prices curbed their downward, volatile nature by finishing the year at higher prices than where they started. In this post, we survey how the industry ended the year from production and supply to bankruptcies and transactions as we look to 2017.
Last month we learned something that might not be a shock to those closely following the oil and gas markets, but might be something of a bombshell to everyone else. A report from Rystad Energy estimated that in July 2016, for the first time ever, the United States has more recoverable oil than any other country on the planet – 264 billion barrels. What was the reward for E&P firms? Ironically, it has unfortunately turned out to be a long line at bankruptcy courts.
In May 2016, we attended a panel event discussing investment opportunities in the financially distressed oil and gas sector. The panel included a “who’s who” of oil and gas experts located in Texas. Two industry participants, two consultants, one analyst and one economist discussed the economic outlook for energy prices and then corporate strategy and investment opportunities given the economic outlook. This post, the second and last summarizing this panel discussion, will report opinions given on corporate strategy and investment opportunities.
Upon confirmation by the bankruptcy court, a bankruptcy plan must not be likely to result in liquidation or further reorganization. To satisfy the court, a cash-flow test is used to analyze whether the restructured company would generate enough cash to consistently pay its debts. This post walks through the three steps of a cash-flow test.
In May 2016, we attended a panel event discussing investment opportunities in the financially distressed oil and gas sector. The panel included a “who’s who” of oil and gas experts located in Texas. Two industry participants, two consultants, one analyst and one economist discussed the economic outlook for energy prices; and then corporate strategy and investment opportunities given the economic outlook. This post, the first of two summarizing this panel discussion, will report on the economic discussion.