Energy Valuation Insights

January 19, 2024 Mergers, Acquisitions, & Divestitures

The Chesapeake and Southwestern Merger

Reshaping U.S. Natural Gas

Chesapeake Energy Corporation and Southwestern Energy Company announced a merger to create the largest natural gas producer in the United States, with an expected output of 7.9 billion cubic feet per day. This $7.4 billion all-stock deal, expected to close in the second quarter of 2024, will see Southwestern investors receiving 0.0867 shares of Chesapeake for each of their shares. The combined company, with an estimated enterprise value of $23 billion, hopes to gain easier access to capital, achieve investment-grade status, and possibly join the S&P 500 while navigating potential antitrust concerns and a potential decrease in NGL prices.

January 12, 2024 Domestic Production Haynesville Shale

Haynesville DUCs Buoy Production Despite Rig Count Decline

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

January 5, 2024 Domestic Production Haynesville Shale

Initiating Coverage of the Haynesville Shale

In 2023, the Haynesville shale, a significant natural gas source in the U.S., experienced a downturn in drilling activity due to low natural gas prices (70% price drop from August 2022). This decline also affected rig counts and day rates, with a notable decrease in both. Despite the market volatility, some M&A activity occurred, including WhiteHawk Energy’s acquisition of mineral interests. Rumored activity included Chevron’s potential sale of its Haynesville assets, indicating a continued interest in this region’s natural gas potential.

December 15, 2023 Eagle Ford Shale Mergers, Acquisitions, & Divestitures Mineral and Royalty Rights Permian Basin Special Topics Valuation Issues

Top 10 Blog Posts of 2023

Year-end 2023 is quickly approaching so that means it’s time to take a look back at the year. Here are the top ten posts for the year measured by readership. Thank you to our readers for your constant support! It’s our honor to cover the oil & gas industry for you.

December 7, 2023 Special Topics

Remembering Charlie Munger

His Investment Wisdom and Legacy

In this week’s post, we honor the late Berkshire Hathaway Vice Chairman by delving into his insightful quotes. Our colleague Brooks Hamner discusses Mungerisms like the pitfalls of flashy investment strategies and the skepticism around cryptocurrency, to the critique of over-diversification and reliance on traditional financial metrics like EBITDA. When it comes to investing in any industry or business, no one had more unique ideas than Charlie Munger.

December 1, 2023 Mineral and Royalty Rights

Mineral Aggregator Valuation Multiples Study Released

With Market Data as of November 17, 2023

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.

November 17, 2023 Mergers, Acquisitions, & Divestitures Special Topics

Themes from Q3 Earnings Calls

Part 2: Oilfield Service (“OFS”) Companies

Key themes we saw in Q3 earnings calls for oilfield service (“OFS”) companies were a rebound in activity, increased M&A in the space, and a focus on capital returns. Operators agree on a positive outlook for 2024, driven by factors like healthy commodity prices and global demand. As the industry evolves and OFS operators continue to make strategic shifts, we’ll keep you updated on future changes.

November 10, 2023 Special Topics

Themes from Q3 Earnings Calls

Part 1: Upstream

This week, we look at earnings calls in the upstream sector for Q3 2023. The past quarter saw significant M&A activity, like Exxon Mobil’s acquisition of Pioneer Natural Resources, which emphasizes efficiency and inventory expansion. As domestic operators are increasing production to meet demand, the industry expects a favorable environment going into 2024.

November 3, 2023 Special Topics

D CEO’s 2023 Energy Awards

Mercer Capital recently attended D CEO’s 2023 Energy Awards, an event that recognizes significant contributions to the energy sector in the Dallas Fort Worth area, including both traditional and renewable energy achievements. The ceremony highlighted the importance of integrating sustainable energy practices, exemplified by Lee Graves’s award for Renewable Energy Executive of the Year, and celebrated major industry milestones like Exxon’s acquisition of Denbury. In a blend of personal and professional narratives, the prestigious Legacy Award was presented to Kelcey Warren of Energy Transfer Partners, featuring discussions of his career and philanthropic impact on the city, notably Klyde Warren Park.

October 27, 2023 Marcellus and Utica Shale

Just Released | 3Q23 Exploration & Production Newsletter

Third Quarter 2023 | Regional Focus: Appalachian Basin

In this quarter’s newsletter, we report that Appalachian production fared well over the last year, particularly considering the sharp decline in the Henry Hub price. Despite the Henry Hub decline, the Appalachian rig count decline was less than that of two of the three oil-rich basins presented, largely due to Appalachia’s higher production declines, which require a higher rig count to maintain production levels.