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.
M&A transaction activity in the Eagle Ford was fairly quiet throughout 2020 before Chevron’s $13 billion deal with Noble Energy. The Chevron-Noble Energy transaction and the Ovintiv-Validus deal could be foreshadowing a busier M&A market in 2021.
Volatile asset returns in the oil patch were commonplace last year. Those returns often got amplified in entities utilizing equity distribution waterfall allocation techniques. It all depended on the structure and how optionality was treated.
Mercer Capital has thoughtfully analyzed the corporate and capital structures of the publicly traded mineral aggregators to derive meaningful indications of enterprise value. We have also calculated valuation multiples based on a variety of metrics, including distributions and reserves, as well as earnings and production on both a historical and forward-looking basis. Check out our report in this post.
Last week, we reviewed the fourth-quarter earnings calls for a select group of E&P companies and briefly discussed the macroeconomic factors affecting the oil and gas industry. In this post, we focus on the key takeaways from mineral aggregators’ fourth-quarter 2020 earnings calls.
In this post, we capture the key takeaways from fourth quarter 2020 earnings calls from E&P operators.
Oftentimes differences are a matter of perspective. Put another way – one person’s loss can be another person’s gain. One of the thematic differences between producers and mineral owners is their perspective on “Held By Production.” It elicits very different reactions depending on what side of the term one is on, and has a leverageable impact on value. With rig counts dropping to around half of last year’s count, how much acreage will be available for re-leasing this year? In this post, we decided to spend some time exploring this concept and its impact on the energy industry.
Irrespective of what industry or sector a company may operate in, a fundamental question arises as mergers and acquisitions persist and company boards and management teams survey their options when a proposed transaction is put on the table: is it fair to all direct stakeholders? This post reviews the basics of fairness opinions and when you should obtain one.
Public transactions do not disclose the value associated with PUDs and unproven reserves, but instead, they indicate an aggregate value for a bundle of assets. The allocation of that value across the various assets acquired is up for debate. Recent transaction sheds some light on asset pricing in the current environment.
Year-end 2020 saw a flurry of tax-purposed project activity across all of Mercer Capital’s offices, with clients’ Estate Planning Counsel having recommended numerous gifts and other estate planning related transactions before 2020 came to a close. While we are all happy to have put 2020 in the rearview mirror, the passing of December 31st does not mean that the gifting opportunity has elapsed. Despite some level of recovery for parts of the Oilfield Services industry during Q4-2020, valuations remain at significantly depressed levels from where they were prior to March 2020. In addition, early indications of the Biden Administration’s intentions in regard to estate taxation indicate that the benefit of estate planning transactions will likely be greater in 2021 than in 2020.
December was a busy month at Mercer Capital, and at business valuation firms across the country. Clients sought to make gifts and perform other estate planning transactions ahead of year-end. But the changing of the calendar does not mean that the window for gifting is over. The factors that led to a rush of estate planning transaction activity during 2020 largely remain. The combination of depressed E&P valuations, the potential for future tax changes, and the ability to utilize minority interest and marketability discounts are still present in 2021.
As we hope for a better 2021, we look back at 2020 to see what was popular with you – our readers. This post includes a list of some of our top posts of 2020.
A reserve report is a fascinating disclosure of information. This is, in part, because the disclosures reveal the strategies and financial confidence an E&P company believes about itself in the near future. Strategies include capital budgeting decisions, future investment decisions, and cash flow expectations. In this post, we provide a general overview of a reserve report, detailing why they’re important, what they contain, and how they’re prepared.
Last week, we reviewed the third quarter earnings calls for a select group of E&P companies and briefly discussed the macroeconomic factors affecting the oil and gas industry. In this post, we focus on the key takeaways from mineral aggregator third quarter 2020 earnings calls.
In this post, we capture the key takeaways from E&P operator third quarter 2020 earnings calls.
Mercer Capital has thoughtfully analyzed the corporate and capital structures of the publicly traded mineral aggregators to derive meaningful indications of enterprise value. We have also calculated valuation multiples based on a variety of metrics, including distributions and reserves, as well as earnings and production on both a historical and forward-looking basis. Check out our report in this post.
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.
In this post, we discuss each candidate’s political platform for the oil and gas industry. The major topics and issues at stake include domestic production, infrastructure plans, OPEC+ engagements, and international sanctions.
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.
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.
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.
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. Mercer Capital has aimed to focus on the mineral aggregator space, most recently with the release of the second quarter mineral aggregator valuation multiples analysis. In this post, we capture the key takeaways from mineral aggregator second quarter 2020 earnings calls.
Mercer Capital has thoughtfully analyzed the corporate and capital structures of the publicly traded mineral aggregators to derive meaningful indications of enterprise value. We have also calculated valuation multiples based on a variety of metrics, including distributions and reserves, as well as earnings and production on both a historical and forward-looking basis. As shown in the report, mineral aggregators’ stock prices have declined substantially over the past twelve months, but have rebounded from lows seen earlier in the year.
The oil & gas market and the energy sector as a whole have taken a beating and experienced unprecedented events due to the global impacts from the pandemic and international price wars. While the scale of the full economic effects from these events has yet to be seen, companies are having to question and consider the need for interim impairment testing on reserves. The purpose of this post is to help oil & gas companies discern whether they may need to make interim impairment assessments and to discuss the impairment testing process.
