Higher oil prices, coupled with lower breakeven costs for producers, are making drillers, completers and a host of other servicers busier than a gopher on a golf course. Does that translate into higher valuations?
A weekly update on issues important to the oil and gas industry
Higher oil prices, coupled with lower breakeven costs for producers, are making drillers, completers and a host of other servicers busier than a gopher on a golf course. Does that translate into higher valuations?
Based upon the content in this blog, representatives from Forbes.com reached out to Bryce Erickson, ASA, MRICS with an invitation to become a contributor to Forbes.com in their Energy section.
In a recent post, we explored the ins and outs of MV Oil Trust. We analyzed the underlying net profit interests it holds, the underlying properties of the trust, and the rights of unitholders including their rights during termination of the trust. This week, we will look into how these play into the composition of the MV Oil Trust’s stock price, and the balance struck between investor’s current return in the form of dividends and potential for returns from capital appreciation.
On April 30, 2018, Marathon Petroleum announced its acquisition of the newly formed Andeavor making Marathon the largest refiner in the U.S. (by capacity) and one of the top five refiners in the world. The merger is moving into its final stages, and Marathon’s CEO is positive about the combination of the two well situated companies. In this post, we analyze the recent acquisition history of Western Refining, Tesoro, and Marathon, which has started to look somewhat like nesting dolls of acquisitions.
In previous posts, we have discussed the relationship between public royalty trusts and their market pricing implications to royalty owners. Many publicly traded trusts have a fixed number of wells, so the value comes from declining distributions. Some of the trusts have wells that have not been drilled, which represent upside potential for investors. In this post, we will explore the subject characteristics of MV Oil Trust. This will serve as a primer for a subsequent post in which we will look further into the composition of its stock price in order to better understand investors’ ability to achieve returns through distributions and capital appreciation.
In this week’s post, we provide a detailed analysis of the Kimbell Royalty Partners’ acquisition of Haymaker Minerals & Royalties, LLC. We assess some of the benefits of public mineral and royalty companies as compared to their private counterparts.
This week we take a break from discussing the Permian Basin to feature a topic that touches most of our readers – buy-sell agreements. Almost every privately owned company with multiple shareholders has a buy-sell agreement (or other agreement that acts as a buy-sell agreement).
The story of the Permian Basin in 2018 so far has been developing as one of the finest proverbial “fishing holes” in the world. However, as the year has progressed, it appears many industry players have found their reputed “catch” too big to process and are scrambling to deal with it before it begins to stink.
Translation: the year began with a flurry of developmental drilling activity followed by an emerging bottleneck. The unintended consequence of this has been that some operators have been growing oil production too fast for pipeline and infrastructure to keep up. A pricing differential has arisen due to the supply glut and there has been concurrent stagnation in valuations. In this post, we discuss how some of it has transpired through the timeline of the first half of 2018.
When oil prices crashed in mid-2014, companies were forced to become more efficient in order to survive. It became clear that location meant more than ever and companies could no longer justify operating in regions such as the Bakken and the Eagle Ford, where break-even prices were higher than they were in the Permian. Thus in order to stay in business, companies flocked to the Permian. This week, we look at how the increased appeal of the Permian Basin has affected M&A activity in the oil and gas sector.
Production in the Permian is as hot as the summers in West Texas. Despite being discovered in the 1920s, it was not until 2007 that the region’s true potential was realized when hydraulic fracturing techniques were used to access the play’s tight sand layers. Given its low-cost economics and large well potential, in recent years, the Permian has been in the limelight with operators and investors alike prioritizing the region.
In this post, we discuss the increase of rig counts and production in the region, along with valuation implications for companies operating in the Permian.
