Energy Valuation Insights

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Themes from Q3 2020 Earnings Calls

Part 2: Mineral Aggregators

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.

Mineral Aggregator Valuation Multiples Analysis

Market Data as of November 10, 2020

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.

Bankruptcy COVID-19 Coverage

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.

Bankruptcy COVID-19 Coverage

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.

COVID-19 Coverage

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. 

COVID-19 Coverage

Themes from Q2 2020 Earnings Calls

Part 1: Mineral Aggregators

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.

Mineral Aggregator Valuation Multiples Analysis

Market Data as of August 14, 2020

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. 

Valuation Issues

Impairment Testing of Oil & Gas Reserves

2020 Global Events Causing Significant Reserve Write-Downs

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.

Mercer Capital’s Mineral Aggregator Valuation Multiples Analysis

Market Data as of June 2, 2020

Mercer Capital has its finger on the pulse of the minerals market. We have 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. Download our analysis here.

Themes from Q1 2020 Earnings Calls

Part 2: Mineral Aggregators

In this post, we examine some of the most discussed items and trends from the Q1 2020 earnings calls, specifically those in the mineral aggregator space.

Uncategorized

Saudi Arabia, Russia, or the United States – Did One of the Players Blink?

It’s been a truly dizzying time in the rough-n-tumble world of oil production.  Like they say, if you miss a day, you miss a lot.  For now, it at least appears that someone may have just blinked.  The Trump administration seems to be on the verge of a truly historic deal to cut worldwide oil production and bring oil prices up to a modestly workable level.  And that with the U.S. not committing to forcing domestic producers to cut production levels but indicating that U.S. production would “naturally” decline without the government’s intervention. That coupled with a potential side-deal with Mexico to “cover” part of the production decrease that was being sought from that country, but that Mexico is unwilling to shoulder on its own. Will it work?  Will the deal be accomplished? Although an agreement was reached to reduce oil production in light of demand destruction caused by the coronavirus pandemic, oil markets appear to remain oversupplied.  Will OPEC+ and other nations agree to another deal to further reduce production?  Will U.S. production decline faster than anticipated due to low oil prices? Will the Texas Railroad Commission implement proration orders for Texas producers? All we can say is, stay tuned – and expect the unexpected.

Themes from Q4 Earnings Calls

In this post, we examine some of the most discussed items and trends from the Q4 earnings calls, specifically E&P companies and those in the mineral aggregator space.

Domestic Production

An Overview of Salt Water Disposal

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.

Exploration & Production Purchase Price Allocations

A Review of E&P Transactions Analyzed in Mercer Capital’s 2019 Energy Purchase Price Allocation Study

Last week, Mercer Capital released its 2019 Energy Purchase Price Allocation Study. In this post, we’ll be taking a deeper dive into the Exploration & Production transactions reviewed in the analysis.

Coming Soon: Mercer Capital’s 2019 Energy Purchase Price Allocation Study

We at Mercer Capital love movies.  One fun aspect of a movie is the anticipation for new releases that comes from watching movie trailers, which inform and tease simultaneously.  If done well, they can build anticipation for the show to come.  While not quite a movie trailer, we wanted to introduce you to a new study from our energy team that we are excited about: Mercer Capital’s Energy Purchase Price Allocation Study. 

Q4 2019 Global Macro Review

U.S. Production Hits Milestones Amid Continued Global Political Tensions

Brent crude prices began the quarter around $59 per barrel and have steadily risen to around $68 to close out 2019. WTI pricing has risen at a similar pace although it continues to trail Brent pricing by about $7 per barrel. Natural gas, however, has been trending in the opposite direction as prices have steadily declined since the end of October. In this post, we will examine the macroeconomic factors that have affected prices in the fourth quarter.

The Best of 2019

Energy Valuation Insights' Top Blog Posts

As we plan for a new year and a new decade, we look back at 2019 to see what was popular with you ­– our readers. This week’s post includes a list of the top posts of 2019 grouped by topic (Transactions, Saltwater Disposal, Oilfield Services Companies, Royalty and Mineral Markets, and Basin-Specific posts). If you missed one or two posts during the year, now is the time to catch up on your reading.

Oil & Gas

Mercer Capital provides oil and gas companies, oil and gas servicers, and mineral & royalty owners with corporate valuation, asset valuation, litigation support, transaction advisory, and related services