Energy Valuation Insights

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

Marcellus and Utica Shale Mergers, Acquisitions, & Divestitures

Observing the Negotiations of the Chesapeake – Southwestern Merger

A Marcellus and Utica Shale M&A Update

M&A activity among upstream participants in the Marcellus and Utica Shales has been sparse in recent years, with Shale Experts reporting only one transaction since November 2022.  This week’s Energy Valuation Insights blog takes a break from deal multiples to observe the negotiations of the $7.4 billion merger between Chesapeake Energy Corp. (“Chesapeake”) and Southwestern Energy Co. (“Southwestern”), a significant player in the Marcellus Shale.

Current Events Domestic Production

Themes from Q2 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q2 2024 earnings calls of Upstream and OFS companies, highlighting the significance of this quarter’s themes across the entire sector. The main themes discussed on these calls include strong international demand for U.S. oil and gas, domestic challenges from natural gas prices, and technological advances in drilling and operational efficiency. We unpack these trends in this week’s post.

Valuation Issues

Unlocking Value in the Oil & Gas Industry

The oil and gas industry is constantly changing, with a lot of moving parts and financial complexities. Accurate valuation of assets within this sector is critical for making informed strategic decisions. At Mercer Capital, we have cultivated a deep understanding of the oil and gas industry through decades of experience. To share our knowledge and insights, we have produced three complimentary whitepapers for our blog readers.

Mineral and Royalty Rights Valuation Issues

What Does the Valuation Process Entail for an Oil and Gas Royalty Interest?

A lack of knowledge regarding the worth of a royalty interest could be very costly. This can manifest itself in a number of ways. A shrewd buyer may offer a bid far below the interest’s fair market value; opportunities for successful liquidity may be missed; or estate planning could be incorrectly implemented based on misunderstandings about value. Understanding how royalty interests are properly appraised will ensure that you maximize the value of your royalty, whenever and however you decide to transfer it.

Valuation Issues

What Does the Valuation Process Entail for an E&P Company?

A lack of knowledge regarding the value of your business could be very costly. Opportunities for successful liquidity may be missed or estate planning could be incorrectly implemented based on misunderstandings about value. In addition, understanding how exploration and production companies are valued may help you understand how to grow the value of your business and maximize your return when it comes time to sell.

Mergers, Acquisitions, & Divestitures Special Topics

Premiums for Inventory Scale

In the last year, M&A activity in the upstream area of the oil and gas industry has increasingly become top-heavy, characterized by several headline deals. While the broader North American E&P deal count has been shrinking since 2022, a handful of major acquisitions in the last year have led to a spike in upstream M&A spending. With fewer yet higher-dollar deals and producers eyeing to expand their portfolios of core acreage, the energy industry’s M&A market has greatly shifted in 2024.

Domestic Production

What’s “Play”-ing in the DJ Basin?

An Introduction to the Denver-Julesburg Basin

The Denver-Julesburg (“DJ”) Basin is a vast and geologically complex basin marked by sedimentary layering, tectonic shifts, and hydrocarbon generation. Encompassing an area of approximately 20,000 square miles, it stretches across regions of Colorado, Wyoming, Nebraska, and Kansas. From an economic standpoint, the DJ Basin has long contributed significantly to the U.S. energy sector. Data from the U.S. Energy Information Administration (“EIA”) reveals the DJ Basin was among the top five oil producers in 2023. In this week’s post we explore important production and players in the DJ Basin.

Mergers, Acquisitions, & Divestitures Permian Basin

Just Released | 2Q24 Exploration & Production Newsletter

REGION FOCUS: PERMIAN

The 2Q24 issue of Mercer Capital’s Exploration & Production newsletter focuses on the Permian. Permian production growth over the past year was a positive outlier among the four basins covered in our analysis, with Eagle Ford, Appalachia, and Haynesville all posting production declines (albeit Appalachia’s decline being insignificant at 0.3%). While showing typical reactions to global and national energy economic forces, commodity prices ended the period modestly improved. Rig count declines were greater than production declines, partly due to the continuation of the recent trend in DUC count declines.

In addition to our overview of the Permian, this newsletter also contains:

– Oil and Gas Commodity Price Update
– Macro Update
– Industry M&A Activity
– Public Company Performance
– Production Update
– Rig Counts

Download the newsletter to stay up to date on the industry.

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