Energy Valuation Insights

January 14, 2022 Special Topics Valuation Issues

What a Difference a Year Makes: Part II

Analyst Projections

We continue the “what a difference a year makes” theme, but now with a focus on analyst projections, then-and-now (then being as of year-end 2020, and now being as of year-end 2021) and energy stock valuation multiples. For the purpose of our analysis, we identified publicly traded energy companies trading on the NYSE and NASDAQ exchanges and operating in three broad areas – exploration and production (E&P), oilfield services (OFS), and midstream. So, what are the analysts expecting? Find out in this week’s post.

January 12, 2022 Marcellus and Utica Shale Special Topics Valuation Issues

What a Difference a Year Makes: Part I

Key Aspects of the Energy Industry in 2021

The close of 2021 marked the end of a long upward march for the energy sector.  With oil closing up the year at $75 and gas at nearly $4 per mmbtu, the commodity markets driving the energy sector were much more economically attractive to producers. Stock indices such as the XLE was up over 50% for 2021 and was by far the best performing sector. Rig counts rose along with prices. Crude production also rose to 11.7 million bbls/day with room to grow. In addition, OPEC+ has signaled it will continue its scheduled output growth. All of this growth is coming alongside the ascent of wind and solar. Even though the Omicron variant affected prices in December, most analysts believe that COVID won’t stop the growth. In this post, we review the industry at the end of 2021 and look forward to 2022.

December 31, 2021 Special Topics

The Best of 2021

Energy Valuation Insights’ Top Blog Posts

After an extraordinarily challenging 2020, 2021 gave Oil & Gas companies some respite and (perhaps most importantly) some optimism going into 2022.  As we enter the new year, we look back at to see what was popular with you ­– our readers.  Here is a list of some of our top posts of 2021.

December 28, 2021 Special Topics

Mercer Capital’s 2021 Energy Purchase Price Allocation Study

In Case You Missed It

Did you miss Mercer Capital’s 2021 Energy Purchase Price Allocation Study? If you did, before we move into 2022, take a look at the 2021 Study. This study researches and observes publicly available purchase price allocation data for three sub-sectors of the energy industry: (i) exploration & production; (ii) oilfield services; and (iii) midstream and downstream. 

This study is unlike any other in terms of energy industry specificity and depth. The study provides a detailed analysis and overview of valuation and accounting trends in each sub-sector. This study also enables key users and preparers of financial statements to better understand the asset mix, valuation methods, and useful life trends in the energy space as they pertain to business combinations under ASC 805 and GAAP fair value standards under ASC 820. We utilized transactions that closed and reported their purchase allocation data in calendar year 2020.

December 17, 2021 Marcellus and Utica Shale

Appalachian Production Stable Despite Price Volatility

The economics of Oil & Gas production vary by region. Mercer Capital focuses on trends in the Eagle Ford, Permian, Bakken, and Marcellus and Utica plays. In this post, we take a closer look at the trends in the Marcellus and Utica.

December 9, 2021 Marcellus and Utica Shale Mergers, Acquisitions, & Divestitures Special Topics

M&A in Marcellus & Utica Basins

Activity in 2021 Was Muted Relative to 2020

M&A transaction activity in the Marcellus & Utica shrank in number in 2021 relative to 2020. However, the relatively greater magnitude of production density represented by the transactions in 2021 could prove to be a bellwether of more “transformational” transactions to come in 2022 as companies stake their claim in the gas and gas liquids-rich basins of Appalachia. In this week’s post we review M&A activity in 2021 including the EQT/Alta Resources and Northern Oil and Gas/Reliance transactions.

December 3, 2021 Mineral and Royalty Rights

Mineral Aggregator Valuation Multiples Study Released

With Market Data as of November 29, 2021

Mercer Capital has its finger on the pulse of the minerals market.  An important trend has been the rise of mineral aggregators, which have largely supplanted the trusts as the primary method of publicly traded minerals ownership.

In this updated Study, 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.

December 1, 2021 Special Topics

Upstream Producers Are Not Gouging–They’re Tentative. Here Are Three Reasons Why

As commodity prices have risen and Q3 profit reports have rolled in, oil and gas companies have been accused of price gouging. This accusation isn’t true. They are tentative and reticent. Why? The answer is found somewhere among supply and demand dynamics, rising costs, and capital headwinds.

November 18, 2021 Mineral and Royalty Rights Special Topics

Themes from Q3 Earnings Calls

Part 2: Mineral Aggregators

Themes in our Q2 mineral aggregator earnings calls digest included capital discipline by operators, expectations of a very favorable price environment, and increases in distributions to shareholders, resulting in an overall optimistic outlook for the sector.  This week we focus on the key takeaways from the mineral aggregator Q3 2021 earnings calls which addressed anticipated acquisition activity, production expectations, and whether or not the sector remains optimistic about the future.

November 12, 2021 Special Topics

Themes from Q3 Earnings Calls

Part 1: E&P Operators

The Q3 earnings calls for E&P operators continued the theme from Q2 – an oil and gas industry reaching a relatively steady operational state, with efficiencies offsetting cost inflation and helping lead to growth in free cash flow despite the tumultuous past 18 to 24 months. In the Q3 earnings calls, maintaining capital discipline with flat or low growth in production volumes was a point of focus as was E&P operators’ possible approaches to fortify their value proposition to shareholders. Check out this week’s post for details.