1 / 24

Overview of the A & D Market IPAA Oil & Gas Investment Symposium April 19-21, 2004

Overview of the A & D Market IPAA Oil & Gas Investment Symposium April 19-21, 2004 New York, New York. Kenneth R. Olive, Jr. Chief Executive Officer Petroleum Place Energy Advisors The Oil & Gas Asset Clearinghouse. Corporate Structure. Specializing in the Customized Marketing

arlen
Download Presentation

Overview of the A & D Market IPAA Oil & Gas Investment Symposium April 19-21, 2004

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Overview of the A & D Market IPAA Oil & Gas Investment Symposium April 19-21, 2004 New York, New York Kenneth R. Olive, Jr. Chief Executive OfficerPetroleum Place Energy Advisors The Oil & Gas Asset Clearinghouse

  2. Corporate Structure Specializing in the Customized Marketing of Upstream Oil & Gas Assets

  3. Divestment Alternatives • Negotiated Transactions • Geographically consolidated packages • PDP and/or with substantial reserve upside • > $20 MM property packages or companies • Technically or operationally complex • Mid-Value Negotiated Transactions • $3-20 MM with material reserve upside • Operated & non-operated working interests • Auction Properties • Geographically diverse • Operated & non-operated working interests • Premiums for royalties & minerals • Individual property values $0-10 MM • Primarily PDP Reserve (70%+)

  4. Total Sales Auctions, Negotiated Sales & MVNsCalendar Year Gross Sales M

  5. 2003 A&D Review • Total MA&D Volume = +$14 Billion • Merger Activity Relatively Quiet • Exceptions: Devon/Ocean & Plains/3Tec • Average Prices for Reserves: • US prices = $6.90/boe (PDP) or $1.00-$1.35/mcfe • Canada = C$9.33 (US $6.99) for “Established Reserves”(Total Proved + ½ probables, before royalty) • Limited Number of Sizable Buying Opportunities • Debt Loads are Down, War Chests are Full

  6. 2003 Review - Sellers • Majors & Public Independents • Focused on shareholder value rather than rate & reserves • Used high prices as opportunity to high-grade portfolio • First real portfolio management since mega-merger days • Private Independents • Viewed 2003 as best time to sell since 2001 • Aggregated enough assets to be significant & attractive • Financial backers are encouraging exit • Small Independents • Can’t buy, so why not sell at lower capital gains tax rates

  7. 2003 Review - Buyers • There is a difference between Bidders & Buyers • Public Independents: • Were Most Aggressive Buyers in 2003 • Tend to incorporate hedging strategies • Use forward strip pricing as far out as possible • Are well capitalized & have adequate production base to fully support an aggressive hedging strategy • Markets are still rewarding growth • Turning a blind eye to debt (leverage = high returns)

  8. 2003 Review - Buyers • If you can’t buy anything, then why not sell? • Private Independents: • Having difficulty competing as a buyer • Merchant fund & private equity return hurdles are challenging • Limited production base to support hedging strategies • Tend to view current market as a selling opportunity • Start again with new investors under better terms

  9. Valuation Considerations Beauty is in the Eye of the Beholder • Value Drivers that Impact Bids • Operations & control • PDP/Upside ratio • Confidence in upside potential • Reserve life and location of property • Technical/Mechanical risks • Strategic implications • Cost of capital

  10. 2003 - How to Buy • Question: How are they doing it? • Technical Advantage – real or perceived • Use Strip Price Deck as Far Out as Possible • Lower Return Hurdles for Strategic Acquisitions • Identify Upside & Pay Aggressively For It • Have a Cost Reduction or Production Enhancement Plan & be Prepared to Implement • Hustle (know the market & build a reputation)

  11. NYMEX Historical Pricing Source: NYMEX.com

  12. NYMEX Gas Price Decks Henry Hub Posted NYMEX/Bank Blend (Forecast)

  13. NYMEX Oil Price Decks NYMEX/Bank Blend (Forecast) Koch OilWTI Posted

  14. Comparison 2003 Results Negotiated Transactions* Auction (total sales of $455 Million in 2003)

  15. Petroleum Place Energy Advisors Negotiated Transactions Asset & Stock Sales 2003 Results

  16. Current Transactions Moran Resources Company Liberty County, Texasoffers due April 29th E. Texas & N. Louisianaoffers received March 9th Crutcher-Tufts Resources, LP Oklahoma CBM Package Cherokee Basin sale pending Kansas Propertiesoffers due April 29th Rocky Mountain Assets available early May Belridge Field, San Joaquin Basin Californiavisit www.p2ea.com for details Rockies, Kansas & E. Texas available early May Gulf Coast Assetsavailable late April Overton Field, E. Texas Cotton Valley Assets sale pending Oklahomasale pending

  17. 2003 Negotiated Results* E TX / N LA $340.2 $45,141 54 $7.83 GULF COAST $482.1 $51,732 -- $7.85 MID-CONT $1,334.3 $34,777 70 $7.05 OFFSHORE $1,634.0 $12,327 11 $7.90 OTHER $7,896.3 $50,996 55 $7.45 PERMIAN $1,290.2 $29,210 52 $5.52 ROCKIES $301.0 $25,800 28 $5.54 SAN JUAN $304.5 $39,027 73 $4.25 S TEXAS $608.2 $21,841 73 $9.18 TOTAL SALES ($MM) CF MULT (MOS) TOTAL PROVED $/BOE (6:01) $/BOEPD (10:1) *Includes P2EA deals and publicly released deals

  18. The Oil & Gas Asset Clearinghouse Auction Transactions 2003-2004 Results

  19. Average Live Auction Fiscal Year SALE SIZE ($MM)

  20. Average Auction Lot Price ($000)

  21. Auction Results – Minimum Bids TOTAL 314,134 WI 264,859 RI 49,275 OP 119,208 NON-OP 145,651 GAS 206,466 OIL 107,668 TOTAL SALES ($M) CF MULT (MOS) PDP $/BOE (6:01) NPV (BFIT) (%) 2003 $/BOEPD (10:1) 31,542 51 8.34 10 28,528 48 7.65 11 72,979 77 16.14 4 25,899 47 7.37 12 31,113 49 7.90 10 43,191 54 9.44 9 20,789 46 6.82 11

  22. Basin Results – Minimum Bids E TEXAS 42,696 40,945 63 9.45 6 GULF COAST 36,187 24,388 31 9.12 17 MID-CONT 99,724 42,744 64 9.49 7 OTHER OFFSHORE 11,779 2,750 28,884 22,600 36 27 24.94 6.90 16 5 PERMIAN 77,730 25,175 52 6.67 12 ROCKIES 30,802 30,506 63 8.14 7 SAN JUAN S TEXAS 9,018 3,450 39,406 30,204 54 34 6.31 10.35 14 13 TOTAL SALES ($M) CF MULT (MOS) PDP $/BOE (6:01) NPV (BFIT) (%) $/BOEPD (10:1) 2003

  23. What to Expect in 2004 • Continued Strong Commodity Prices • Companies enjoying cash flow • Marginal properties are currently economic • Significant Capital Available for Acquisitions • Buy First Then Sell • Right Opportunities are Scarce & Competitive • Private Companies are Cashing In • New Divestiture Lists are Being Developed

  24. Contact Us Houston Headquarters Kenneth R. Olive, Jr. – President & CEO Dan Sodersten – Sr. VP - Technical Resources Ron Barnes – Sr. VP - Business Development Phone: 281-873-4600 Fax: 281-873-0055 Houston HeadquartersKenneth R. Olive, Jr. - CEORob Bilger – PresidentDane Isenhower - VP & General Manager Steve Fitzgerald – VP Business Development Phone: 281-873-4603 Fax: 832-601-7668 Houston Region Kevin Townsend – Client Relations Manager Denna Arias – Client Relations Representative Phone: 281-873-4600 Fax: 281-873-0055 Oklahoma Region Bob Dawson – Client Relations Manager Phone: 405-728-2353 Fax: 405-728-2398 Denver Region John Klee – Client Relations Manager Phone: 303-263-1946 Fax: 303-744-8220 Dallas Region Kirk Pogoloff – Client Relations Manager Phone: 214-696-6400 Fax: 214-696-6470

More Related