CM - Analyst Notes - June 26, 2020Antero Resources Corp. (NYSE: AR; $3.77-June 19; Hold; PT-$4) Announced a $402MM headline value ($300MM upfront, ~$102MM contingency payments over next 12mo) transaction for a weighted average ~1.0-1.5% ORRI across AR’s asset base (1.25% ORRI in existing producing wells, 3.75% ORRI in existing acreage in wells completed over next three years; after a 13% IRR and 1.5x cash-on-cash return to buyer, AR will have an 85% reversionary interest); headline valuation ~in-line with TPHe...
Jun 26, 2020
A&D - Bankruptcy sales emerge as key feature of YTD M&A - June 2020As low oil prices hammer companies’ bottom lines, Section 363 sales are becoming a more prevalent feature in the US upstream space. Rockies-focused Southland Royalty received bankruptcy court approval for the $53.32 million sale of its San Juan Basin assets in New Mexico and Colorado to MorningStar Partners (PG.1). Eagle Ford producer Freedom Oil & Gas, the Houston-based operating arm of Australia-listed Freedom Oil & Gas Ltd., is selling its assets to Australian environmental services...
Jun 12, 2020
CM - Targa adjusts capital spending to $700-800MM in 2020 - June 2020Targa Resources Corp. reduced 2020 net growth capital spending by 40% at midpoint to $700-800 million. Net maintenance capital spending will come in at about $130 million, and operating expenses, including G&A, will be cut by $100 million. Adjusted EBITDA is now expected to be in the $1.4-1.6 billion range as Targa considers several volume assumptions stemming from potential production shut-ins across its G&P operating regions. In March, Targa cut its annual dividend by 90% to...
Jun 05, 2020
PS - Analyst Notes - June 2, 2020EOG Resources (EOG; $48.20-May 13; Buy; PT-$62) Last week’s update to 2020 guidance had a number of moving components to work through including a Q2 frac holiday and 40mbopd of annual shut in volumes that took production well below consensus expectations. Our updated model puts capex at $3.4B, or the lower end of the $3.3-3.7B guidance, with our FY oil production of 392mbopd in line with management expectations. Decline rates have been extremely topical for this name, with our updated...
Jun 03, 2020
ES - Peregrine Energy Partners Highlights - June 2, 2020Peregrine Energy Partners has entered an agreement to acquire producing natural gas royalties from undisclosed sellers. Operated by Range Resources, Antero Resources and EQT Corp., the assets lie in Washington County, Pennsylvania, and Tyler and Richie counties, West...
Jun 02, 2020
MI - Targa makes additional moves to combat falling volumes - May 2020Targa Resources Corp. reduced its 2020 net growth capital spending by 40% at midpoint to $700-800 million, one of several measures the company outlined in its Q1 results. Net maintenance capital spending for the year will come in at about $130 million, and operating expenses, including G&A, will be cut by $100 million this year, the company reported. Adjusted EBITDA for 2020 is now expected to be in the $1.4-1.625 billion range, taking into consideration varying volume assumptions...
May 27, 2020
MI - Antero cuts capex again, expects larger ROIC in 2020 - May 2020Antero Midstream Corp. further reduced its 2020 capital budget to $215- 240 million from an earlier 15% cut off its original $300-325 million spending range. The capex budget is now 65% off 2019 actual spending, and, as a result, free cash flow is expected to increase by 9% to $420-250 million. Antero also expects to report a $140-170 million annual net loss versus previous guidance of $345-385 million in profits as it writes down noncash goodwill impairments. EBITDA will be in the $800-830...
May 06, 2020
CM - Oil in the time of coronavirus - April 2020US oil production has been holding at near record highs even as demand for gasoline falls, but it’s coming under pressure to tap the breaks on pumping out high volumes that are helping to bring prices down to historic lows and pushing cash-strapped companies to bankruptcy. Whiting Petroleum (PG.1) is the first high-profile shale producer to file a petition in what analysts believe may be a new parade of Chapter 11 filings. Oil executives themselves have asked the Texas Railroad Commission to...
Apr 03, 2020
CM - Now Battalion, former Halcón budgets up to $76MM for year - April 2020Battalion Oil Corp., formerly known as Halcón Resources Corp., announced it was considering revisions to its 2020 budget to lower anticipated capital expenditures to the $60-76 million range. This budget would include drilling four to six gross operated wells and putting online six to seven gross operated wells during the year. The company initially planned to spend $123-138 million, which would have kept one rig active throughout 2020 in order to spud about 10 wells and place online 12-14...
Apr 03, 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 Briefs - June 26, 2020Northern Oil & Gas Inc. will ask its shareholders to vote sometime in Q3 to reverse split its NYSE-traded common shares. It is considering ratios ranging from 1:6 to 1:10. A change in authorized shares will accompany the reverse split. Northern’s 430 million shares outstanding have been trading mainly in the $0.60- $1.00 range in Q2. Texas Pacific Land Trust is moving forward with plans to reorganize into a Delaware corporation and has filed an initial draft registration statement...
Jun 26, 2020
MI - A&D Briefs - June 17, 2020Sprague Resources Holdings LLC withdrew a non-binding proposal that it had made in March to buy all the outstanding common units of Sprague Resources LP. Holdings offered $13/share in cash to buy up all the remaining shares in the partnership that it did not already own. Holdings and affiliates owned 53.3% of the NYSE-traded partnership units when the offer was made. Portsmouth, New Hampshire based Sprague buys, stores, distributes and sells refined products and natural gas. It also...
Jun 17, 2020
A&D - News Briefs - June 12, 2020CH4 Energy, backed by NGP Energy Capital Management, is shopping operated Delaware Basin assets in Reeves County, Texas. The offering covers 1,317 net acres (1,328 gross), which include two undeveloped sections with strong offset production and three-year lease terms. There are 22 operated wells, 16 shallow producers and three injector and disposal wells; and three productive horizons, Third Bone Spring, Wolfcamp A and Wolfcamp B—plus emerging First Bone Spring potential being tested in the...
Jun 12, 2020
CM - Upstream Briefs - April 24, 2020Callon Petroleum Co. will propose a reverse split of its common stock to regain compliance with NYSE continued listing standards. It received a deficiency notice from the exchange on April 10 because the price of its common shares had fallen below $1 per share over a period of 30 consecutive trading days. Callon has 397 million shares outstanding and has been trading in the $0.40-$0.50 range during April. DoublePoint Energy, LLC announced the addition of Citi to its lending syndicate...
Apr 24, 2020
CM - Upstream Briefs - April 3, 2020Baytex Energy Corp. disclosed it had received a NYSE deficiency notice on March 24 because its stock had been trading below $1.00 over a consecutive 30-day period. The company, which is dual listed on TSX and NYSE, has six months from the date of notification to cure the deficiency and regain compliance. The company’s stock is currently trading at $0.24 on the NYSE and C$0.335 on TSX. CNX Resources subsidiary Cardinal States Gathering Co. signed a $125 million, eight-year first-lien...
Apr 03, 2020