Energy Valuation Insights

September 14, 2023 Marcellus and Utica Shale Mergers, Acquisitions, & Divestitures

Inside the Board Rooms of a $5.4 Billion Oil and Gas Merger

Explore the behind-the-scenes journey of the $5.4 billion merger between Sitio Royalties Corp., a key Marcellus Shale player, and Brigham Minerals, Inc. From initial boardroom discussions to the complex interplay of exchange ratios and legal negotiations, see how two of the largest public companies in the mineral and royalty sector and their legal and financial advisors navigated challenges to achieve a strategic consolidation. Read how business strategies, market conditions, and negotiations shaped an industry leader in mineral and royalty acquisitions.

September 1, 2023 Special Topics

Themes from Q2 2023 Earnings Calls

Part 2: Oilfield Service (“OFS”) Companies

Despite initial downward trends in commodity prices in 2023, a sustained period of healthy prices, particularly for crude oil, has instilled an industry-wide sense of optimism about future growth in spending. Key industry leaders emphasize the role of technologies in boosting operational performance, echoing the sentiment that proper tech implementation is directly linked to better financial outcomes. As companies gear up for a prolonged upcycle in activities, technology and commodity prices are helping set the stage for an optimistic outlook through 2024 and beyond.

August 25, 2023 Mineral and Royalty Rights

Mineral Aggregator Valuation Multiples Study Released

With Market Data as of August 21, 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.

August 18, 2023 Special Topics

Themes from Q2 2023 Earnings Calls

Part 1: Upstream

In the recent Q2 2023 earnings calls, upstream executives noted the shift in their focus from exploration to maintaining production through various strategies, such as acquiring legacy assets and implementing well workovers. Furthermore, leaders predict pressures on the global crude oil supply, with expectations of OPEC+ continuing their production cuts and minimal refinery capacity. Additionally, despite record production levels in the Haynesville Shale, there’s been a noticeable drop in drilling and completion activity, as natural gas prices continue to decline from 2022 highs. Dive deeper in this week’s blog.

August 11, 2023 Special Topics Valuation Issues

Industry Expert vs. Valuation Expert: Which Should You Choose?

Choosing an industry expert to value your oil & gas company has several distinct benefits that stem from a deep understanding of the sector’s unique dynamics, trends, and complexities. Selecting a valuation expert to assess your oil & gas company brings a distinct set of advantages rooted in their specialized training, adherence to recognized standards, and a focused approach to valuation. So, which should you choose? In this article, we make the case for choosing an industry expert and then make the case for choosing a valuation expert. Then we suggest the a solution.

August 4, 2023 Permian Basin

Value Focus | Exploration & Production

Second Quarter 2023 | Region Focus: Permian

In this quarter’s newsletter we focus on the Permian. Production growth over the past year continued to run well, in the Permian, ahead of growth in the Eagle Ford, Appalachian, and Bakken, as the Permian basin remains one of the most economic regions for U.S. energy production. With the decline in commodity prices over the past year, rig counts fell, with the most significant decline occurring in May. With E&P firms expecting continued cost increases through the remainder of 2023, the Permian’s existing cost advantage will contribute to its continued dominance over the major U.S. basins.

July 28, 2023 Mergers, Acquisitions, & Divestitures Valuation Issues

Exxon’s Acquisition of Denbury

A Tale of Two Businesses, and Neither One Is Worth $4.9 Billion

Exxon made waves in the energy M&A markets by announcing its acquisition of Denbury, Inc. In total, the headline value was around $4.9 billion. However, while Denbury is an energy company on the whole, it is made up of two main segments that have very different economics, and neither of their business segments appears to be worth the $4.9 billion price tag. So what did Exxon buy exactly, and how might one value it?

July 12, 2023 Permian Basin

Permian Production Growth Holds

The economics of oil and gas production, particularly in the Permian basin, have seen significant shifts over the last year, with the basin outpacing others in production despite declining rig counts. A significant drop in oil and gas prices has had a direct impact on the industry, and there’s a rising expectation among executives for increased production costs by the end of 2023. Despite these challenges, the Permian’s inherent cost advantages position it to maintain its dominance in the U.S. energy sector.

June 30, 2023 Mergers, Acquisitions, & Divestitures Permian Basin

M&A in the Permian

Acquisition Growth Flat Ahead of Expected Surge

Despite a flat transaction activity in the Permian Basin over the past year, the increasing scarcity of Grade-A drilling sites has led to a spike in the value of deals, with two recently closed deals valued at over $2 billion each. Amidst this landscape, companies are paying more per acre than before, with the median price per net acre increasing by 43% year-over-year, potentially suggesting a shift in focus towards undeveloped acreage. Furthermore, recent transactions, such as Civitas Resources’ $4.7 billion acquisitions of oil-producing assets in the Midland and Delaware Basins, highlight the industry’s continued attraction to the Permian Basin’s potential for high-return drilling inventory.

June 23, 2023 Mineral and Royalty Rights

Mineral Aggregator Valuation Multiples Study Released

With Market Data as of June 19, 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.