A weekly update on issues important to the oil and gas industry
Our whitepaper “How to Value Your Exploration and Production Company” provides an informative overview of the valuation of exploration and production companies. Because of the historical popularity of this post, we revisit it this week. This post helps you, the reader, understand how E&P companies are valued which may help you understand how to grow the value of your business and maximize returns when it comes time to sell.
Bryce Erickson recently attended the 2019 NAPE Expo in Houston, Texas. One of the repeated sentiments among several panelists was that valuations are currently attractive despite declining commodity prices and logistics constraints. If capital and resource supply are managed efficiently, it could align the strong upstream and midstream potential with cash flow reality.
Commodity prices exhibited significant volatility to end 2018 with steep declines in crude prices and a spike in natural gas prices that subsequently fell back. The general market also declined over the period, making it difficult to parse reasons for various stock price gyrations. While lower prices aren’t ideal for industry operators, earnings calls remind wary investors that there’s more to price than what trades on the NYMEX. Executives this quarter also note a shift in focus when it comes to capital outlays.
This week, we take a look at some of the earnings commentary of large players in the oil and gas space to gain further insight into the challenges and opportunities developing in the industry.
Mercer Capital is pleased to announce that J. David Smith, ASA, CFA has joined the firm and leads the firm’s Houston office.
A partnership is a business owned by two or more individuals. In its most basic form, a partnership typically falls into one of three categories: a general partnership, a joint venture, or a limited partnership. While the specifics of these three types can vary depending on the goals of the business, they all share similar features. For the purposes of this post, we will be examining benefits and rights we have come across in performing valuations over various types of partnership structures and their relation to value.
There are several indicators out there that are sending mixed messages for valuations in the upstream sector. They create a visual of what is happening and what could happen going forward. This post looks at a few of these indicators to gain clarity.
When valuing mineral interests, it is important to consider the nuances of the each type of mineral interest. Given that risk and asset values are indirectly related, it is important to keep in mind the various risk factors which pertain to the mineral interest. We’ll begin by examining the various risks surrounding both types of interests.
As we’ve discussed, there are plenty of factors to consider when determining the value of mineral interests. While some mineral owners may be very well attuned to decline curves and local pricing dynamics, others may only casually monitor the price of oil and gas to get a general sense of the trend in the industry. This post is geared towards those mineral interest owners who have less knowledge on the subject and should serve as a guide for those looking to learn more about what they own.
Companies in the energy sector and the broader market experienced an interesting year showing steady and strong growth in Q1-Q3 and met volatility in Q4, which effectively erased gains on the year and even resulted in negative returns. The oilfield services (OFS) sector, in particular, was impacted heavily during last quarter’s downturn driven primarily by fears of oversupply in the market and E&P companies cutting back and looking for discounts.
Q4 2018 was truly a dramatic quarter for the industry. It marked the end of the two and a half-year oil price recovery that began in 2016, while natural gas prices reached their highest point since 2014. With ongoing oversupply concerns, stabilizing geopolitical tensions, and lower forecasts for global oil demand, it appears in 2019 oil prices have a long way to recover to its previous high in 2018.
