Energy Valuation Insights

A weekly update on issues important to the oil and gas industry

Current Events Special Topics

Themes from Q2 2025 Earnings Calls

Disciplined Capital Allocation Meets International Opportunity Amid Domestic Uncertainty

Q2 2025 earnings calls reflected an industry still guided by discipline but open to opportunity. OFS providers and E&P companies alike reiterated their focus on returning capital to shareholders and preserving balance sheet strength, while also pointing to selective international and offshore growth initiatives. The result is a sector cautious about near-term pricing and activity levels in North America, yet strategically positioning for selective long-term expansion. Read more in this week’s post.

Special Topics Valuation Issues

Why E&P Companies Need a Quality of Earnings Analysis

The Dallas Fed Q2 Energy survey highlighted the growing uncertainty and continued pessimism in management sentiments across the sector. Given the concerns shared about the future of the oil and gas markets, it is more important than ever for a potential seller to be able to provide potential buyers with a clear picture of the company’s capacity for generating cash flows. In this week’s post, we highlight the value of a Quality of Earnings (QofE) analysis in the transaction process.

Permian Basin

Just Released: Q2 2025 Oil & Gas Industry Newsletter

Regional Focus: Permian

The Q2 2025 issue of Mercer Capital’s Exploration and Production Newsletter focuses on the Permian. The Permian basin continues to serve as the centerpiece of the U.S. shale revolution. However, the basin will face challenges in the near future as rising water and associated gas content are contributing to increased production costs, leading to more cautious drilling plans for basin operators.

Current Events Special Topics

Change in Republicans’ Thinking Shifts Policy Support in Renewables

Americans have been and continue to be hungry for energy, in any effective form they can get it, renewable or not. While a majority of Americans still prioritize renewables in energy policy, a shift is taking place, mostly among younger Republican and Republican-leaning individuals, according to a recent Pew Research Study. In this week’s post, we detail how this has been changing since the end of Trump’s first term in office and what the future may hold for renewable energy.

Permian Basin

Permian Producer Stocks Pummeled

The economics of oil and gas production vary by region. Mercer Capital focuses on trends in the Permian, Eagle Ford, Haynesville, and Marcellus and Utica plays. The cost of producing oil and gas depends on the geological makeup of the reserve, the depth of the reserve, and the cost of transporting the raw crude to market. We can observe different costs in different regions depending on these factors. In this week’s post, we take a closer look at the Permian.

Mergers, Acquisitions, & Divestitures Permian Basin

Royalty Consolidation Accelerates Amid Broader E&P M&A Wave

While large-scale upstream M&A has dominated industry headlines, the mineral and royalty space has quietly sustained deal momentum over the past year. From high-profile corporate mergers to strategic bolt-ons and capital recycling plays, activity in the Permian Basin remains robust. Publicly traded royalty platforms are leveraging both equity and debt to consolidate top-tier assets, signaling a maturing market where scale, structure, and selectivity are reshaping the investment landscape.

Valuation Issues

Understanding the EV/Production Multiple

Oil and gas analysts use many different metrics to explain and compare the value of an oil and gas company, specifically an exploration and production (E&P) company. The most popular metrics (at least according to our eyeballs) include EV/Production, EV/Reserves, EV/Acreage, and EV/EBITDA(X). In this post, we will dive into the EV/Production metric, and explore its most popular uses.

Current Events Mergers, Acquisitions, & Divestitures Mineral and Royalty Rights Permian Basin

Viper-Sitio Transaction Signals Strategic Shift in U.S. Royalty Landscape

On June 3, 2025, Viper Energy, a subsidiary of Diamondback Energy, Inc., announced its plan to acquire Sitio Royalties in an all-stock transaction valued at approximately $4.1 billion. The acquisition includes Sitio’s roughly 34,300 net royalty acres, 25,300 of which are concentrated in the Permian Basin. The Viper-Sitio merger represents a notable shift in strategy within a traditionally fragmented sector. It signals a move toward greater scale, operational leverage, and investor confidence in the royalty business model.

Current Events Special Topics

Capital Shifts and LNG Lifts

Takeaways from the 2025 Hart Energy Capital Conference

The energy industry is at a critical point, where producers must not only meet the ever-growing global energy demand resulting from population growth, industrialization, and the increasing electrification of uses, but also adapt to ever-changing environmental regulations and shifting societal expectations related to sustainable practices.

On June 4, 2025, Hart Energy hosted its annual Energy Capital Conference, which brought together capital providers and industry executives for an update on the funding that drives the oil and gas segment of the energy industry. In this week’s post, we recap how the conference reflected this crossroads in the industry and summarize key topics, including capital allocation and the outlook for M&A and LNG.

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