PS - US E&Ps execute significant Q2 oil curtailments - June 2020The coronavirus pandemic has resulted in unprecedented demand destruction for oil markets. The International Energy Agency projects that global demand will fall by a record 9.3 MMbo/d in 2020. In the middle of the lockdown, April demand was down 29 MMbo/d YOY. In response to greatly oversupplied oil markets, OPEC+ agreed in mid-April to cut 9.7 MMbo/d in May and June. The IEA estimated that global output would fall 12 MMbo/d in May. Outside of the OPEC+ cuts, major and independent US producers...
Jun 03, 2020
A&D - Continental’s minerals JV spent $130MM in 2019; more to come - March 2020A minerals JV of Continental Resources and Canadian gold royalty owner Franco-Nevada Corp. spent $130 million in 2019 to acquire SCOOP and STACK mineral assets. The total, announced in Continental’s 2019 annual report, came in below the $150 million ultimately allocated by the JV for 2019 acquisitions. In a filing last July, Continental said the partnership had already spent more than 75% of its initial $125 million allocation during 1H19, all in the SCOOP, prompting it to increase the...
Mar 19, 2020
A&D - Analyst Notes - March 19, 2020Continental Resources (CLR; $17.46-Feb. 27; Buy; PT-$30) CLR’s 2020 plan came out flat given low forecasted growth w/moderate FCF at current levels after a solid 4Q19/2019. We believe given the operational acumen, solid assets & numerous monetization opportunities, CLR’s initial 2020 guidance could be considered conservative as with initial 2019 guidance. Further, a 2020 transition should set up for a notable 2021. We see near-term catalysts including upside from Springboard 2 &...
Mar 19, 2020
CM - Upstream companies make quick capex cut decisions - March 2020Though more are certain to come as the industry adjusts to a new pricing climate, a number of companies have already announced changes to 2020 spending plans and strategies. By and large, the companies that have made early capex reduction announcements have high exposure to the Permian and other oil-weighted oil plays. Apache Corp. cut its 2020 capex to $1- 1.2 billion from $1.6-1.9 billion and is cutting its quarterly dividend by 90% to $0.025/ share. Its rig count in the Permian will...
Mar 13, 2020
PS - Analyst Takes - March 9, 2020Antero Resources (AR; $1.77-Feb. 12; Hold; PT-$2) Q4 a wash, with production miss (3,185mmcfe/d -5%/-4% vs. TPHe/Street 3,340/3,332 and 151mboepd NGLs -11%/-10% vs. TPHe/Street 170/168, attributed to TIL timing) offset by capex beat ($300MM -7%/-9% below TPHe/Street $322MM/$328MM). Capex beat driven by better-than-expected well costs (Q4 actuals $860/ft vs. target $895/ft) that are flowing through to a down-tick in FY’20 spending plans (previous $1.15-1.20B D&C narrowed to low-end,...
Mar 09, 2020
CS - Canadian O&G starts 2020 with hangover from 2019 - January 2020To put it mildly, 2019 was a challenging year for the Canadian oil and gas sector. Mandatory production curtailments in Alberta, supply bottlenecks, heavy regulations and a virtual standstill in M&A, among other factors, left most industry participants happy to leave the year behind. The degree to which these challenges are either remedied or surmounted will largely determine the narrative of the Canadian oil patch in 2020. There were only $6.1 billion in upstream deals with disclosed...
Jan 08, 2020
A&D - Upstream M&A sees uptick as 2019 finish line approaches - December 2019After Permian consolidation went silent following Parsley Energy’s $2.3 billion acquisition of Jagged Peak Energy in October, WPX Energy topped that Dec. 16 with a $2.5 billion deal to acquire EnCapbacked Felix Energy (PG.1). The deal further shifts WPX’s portfolio from the Bakken to the Permian, adding 58,500 net acres with 1,500 in the eastern Delaware basin with anticipated 2Q20 net production of 60,000 boe/d (70% oil). Another recent Permian deal made headlines in the Midland Basin....
Dec 19, 2019
CM - Analyst Notes - December 13, 2019Antero Resources Corp. (NYSE: AR, $2.57-Dec. 9; Hold; PT-$4) AR announced its restructured deal with Antero Midstream this morning, as well as an outline of how it will deal with the ’21 and ’22 bonds. We believe that a royalty sale is the most likely candidate for the de-levering, and we estimate that a 1% ORRI would be worth ~$400mm (i.e. 2.5% to take out ‘21s). Look for the company to be able to handle a $100-300mm LoC bump mainly via surety bonds. AR also seems to be making strides...
Dec 13, 2019
PS - E&P firms renew search for new targets, play extensions - December 2019Despite the industrywide reduction in activity, E&P companies continue to find upside in core expansion, under-explored formations and newly acquired areas for development. In the Texas part of the Delaware basin, Marathon Oil announced that it has established a new oil play targeting the Woodford and Meramec. The company said it put together a position exceeding 60,000 net acres in Ward County at a low entry cost of $2,400/acre (PG.9). The company has also meaningfully added to its inventory...
Dec 06, 2019
CM - People & Companies - October 4, 2019Alta Mesa Holdings GP, LLC announced that interim CEO James T. Hackett resigned from that role on Sept. 10 but will continue as executive chairman of Alta Mesa Resources, Inc. The GP is the general partner for Alta Mesa Holdings, LP and filed for bankruptcy together with Alta Mesa Resources. Basic Energy Services, Inc. announced that president, CEO and director TM Roe Patterson is transitioning away from the company but will stay through the appointment of his successor. Also,...
Oct 04, 2019
CS - Upstream M&A slams brakes in Q3, trails other subsectors - October 2019Q3, trails other subsectors Canadian upstream M&A remained virtually non-existent in Q3, with $235.3 million in deals with disclosed values across six announced transactions. That’s the second-lowest quarterly total recorded by Enverus’ M&A Database after Q1, which had eight deals, including five with disclosed values totaling $70 million. While a confluence of heavy regulations, market volatility, supply bottlenecks and ongoing production curtailments in Alberta have contributed to the...
Oct 02, 2019
MI - PE firms sniffing around Oxy’s stake in Western Midstream - September 2019Private equity firms are reportedly considering bidding for Occidental Petroleum’s majority stake in Western Midstream Partners. Spartan Energy Acquisition Corp., an Apollo Global Management Inc.-backed special purpose acquisition company that went public last November, The Blackstone Group, Global Infrastructure Partners and KKR & Co. are all interested, according to a Bloomberg report citing people familiar with the matter. All have executed multi-billion-dollar acquisitions in the midstream...
Sep 26, 2019
A&D - People & Companies - September 19, 2019Alta Mesa Resources declared bankruptcy on Sept. 12 and concurrently announced management changes. Interim CEO Jim Hackett is now executive chairman and will remain involved with the board and management during the restructuring process. Former interim strategy and corporate development EVP Mark Castiglione has been promoted to CEO. Former interim president Randy Limbacher is now strategy EVP, while former COO John Campbell is now president and COO. Devon Energy named David Harris...
Sep 19, 2019
A&D - Analyst Notes - September 19, 2019Callon Petroleum (CPE; $4.71-Sept. 9; Hold; PT-$12) Paulson & Co. announced its intention to vote its 9.5% stake against the proposed CRZO acquisition and urged CPE to put itself up for sale. Given the equity’s severe underperformance since the deal was announced, we wouldn’t be surprised if other shareholders take this discussion seriously given the $7.5MM fee for a negative shareholder vote pales in comparison to the market cap loss since the deal was announced. As highlighted in...
Sep 19, 2019
PS - News Briefs - November 11, 2019Bonanza Creek Energy’s Q3 production was flat as anticipated at 24,300 boe/d (57% oil). The company brought 23 wells online, which should help to drive modest volume growth in Q4. Lease operating expenses for Q3 are expected to be $3.00/ boe, up slightly from Q2 and resulting in a YTD LOE of $2.93/boe, which is within 2019 guidance of $2.75-$3.25/boe. Capital expenditures for the quarter are estimated to total $46.8 million, bringing capex so far this year to $173.2 million, trending below the...
Nov 11, 2019