Blockbuster Deals - Reporting from the Front Lines
Blockbuster Deals - Reporting from the Front Lines Randy King Managing Partner
Acquisition & Divestiture Specialists Our managing partners’ collective experience includes 22 years as reserve consultants with Netherland, Sewell, & Associates, Inc.; 30 years as senior advisors at Petrie Parkman, Bank of America Merrill Lynch, and Anderson Oil & Gas, Inc.; and 18 years as industry executives at Exxon and Wynn-Crosby Energy. We have participated in approximately 190 deals with a total value of over $87 billion.
Since inception in 2012, Anderson King Energy has completed 13 transactions totaling over $10.5 billion GeoSouthern & Blackstone, Wolf Exploration, TreadStone
2014
SemGroup (Midstream), High Point (Utica), Alta Energy Partners Canada, Burnett Oil 2013
BXP, Vada, Private PA-Marcellus Transaction, Saddle Butte Pipeline, LLOG, Plano Petroleum
2012
2009
Over 180 upstream asset and private company sales totaling
2006
over $76 billion in value (1993-2011) 1993
Bill Anderson
Randy King
Managing Partner
Managing Partner
Careers built on reservoir engineering, transaction consulting, and client service Continuous involvement in the asset market for decades 1
Market Outlook LTM E. & S. TX A&D Transactions (>$75MM) Date Announced Buyer 6/16/2014 ENXP
Seller
TreadStone
Proved Net Price Reserves Production ($MM) (MMBOE) (BOEPD) $715 33 8,430
5/21/2014 Sanchez Energy
Royal Dutch Shell
$554
5/15/2014 Panhandle O & G
Undisclosed
$80
60
24,000
106
733
2
RKI E&P / Ram 5/9/2014 Energy / Scout Energy
Chaparral Energy
5/7/2014 Encana
Freeport‐McMoRan
5/6/2014 PT Saka
Swift Energy
4/29/2014 Undisclosed Memorial Prod. 3/25/2014 Partners 2/26/2014 New Gulf Res
Encana Corp.
$530
33
17,867
Alta Mesa Holdings
$173
7
1,650
Halcon
$450
16
3,800
2/7/2014 Baytex
Aurora
$2,350
79
22,500
$3,100
59
53,000
$175
$9.23
$23,083
$5,226
$109,686
$45,296
GeoSouthern
$6,000
400
53,000
Halcon
$302
21
4,500
9/10/2013 Marathon Oil Corp. 9/9/2013 Sanchez Energy
Undisclosed Rock Oil Co.
$97 $220
11
2,000
$108
7/31/2013 KKR
EXCO Resources
$131
7/16/2013 Meidu Holdings 7/15/2013 Memorial LP
Woodbine Holdings Memorial LLC
$535 $603
7/3/2013 EXCO Resources
Chesapeake
$680
7/1/2013 QR Energy
Undisclosed
$109
46
$52.54
$58,491
8
9/12/2013 Undisclosed
Enervest
Value Value Value Life ($/Proved BOE) ($/BOEPD) ($/ACRE) (R/P) $21.80 $84,816 $39,071 11 7
90
$68,132
$15.90
$29,664 $104,848
83
$27.61
$118,421
22
$29.86
$104,444 $106,335
13 82
5 4
3
$21,084
$23.38
$5,889
$5,422
$113,208
$14.25
$67,111
$19.64
$110,000
$73,171
Dimmit/LaSalle/Webb
5
Karnes
12
Leon/Madison/Grimes
‐176 operated producing wells; 200 drilling locations; 60% liquids.
10 Karnes/Atascosa/Live Oak ‐Corp. Acquisition Brazos/Madison/ Grimes ‐Vess to operate assets. 21
DeWitt/Lavaca
13 $20,208 $61,111
Comments
‐Delaware Basin / Ft. Worth Basin / Ark‐La‐Tex Assets ‐Ark‐La‐Tex assets with prod ~1,000boepd (24% liquids) with Eagle Ford & Woodbine targets bought by Ram. Karnes/Wilson/Atascosa ‐~400 drilling locations ‐Swift & PT Saka to jointly develop Eagle Ford props with Swift continuing as operator. ‐PT Saka to pay Swift $175MM ($125MM cash at Webb closing & $50MM cash to carry portion of future field dev. costs) to acquire 36% full participating interest in properties. Leon/Robertson ‐97% natural gas.
12
$8,308 $15.00
County(ies) Houston/Madison
LaSalle/Frio
$201
GE Energy & Vess Oil 11/20/2013 Devon 1/8/2014
Net Acreage (000) 18
‐Halcon's non‐core conventional assets in north TX. ‐Marathon's core south TX EF position.
16
McMullen ‐KKR & EXCO to form JV targeting Eagle Ford assets. ‐KKR to acquire 50% interest in undev. Eagle Ford acreage for $131MM & to fund & own 75% of future dev. EXCO to fund & own remaining 25%.
28 46
6
Total (20 Deals): $17.1 Billion
5,000 7,550
15 136
6,100
55
900
$18.90 $13.16
$18.20
685+ thousand net acres
2
$107,000 $79,868
$35,430 $4,434
$111,475
$12,364
$121,333
16 17
19
Brazos/Madison/Grimes ‐Corp. Acquisition ‐48% Permian/31% ETX/21% Rockies Zavala/Dimmit/La Salle/Frio ‐Ark/La/Tex Assets
Recent Case Studies
July, 2014
Energy & Exploration Partners, Inc. (“ENXP”) closed on the purchase of Buda-Rose assets from TreadStone Energy Partners, LLC (“TreadStone”) for $715 Million in July 2014. The assets, located in Houston & Madison Counties, included 18,300 net contiguous, HBP acres in the core of the East Texas Buda-Rose play with an average royalty burden of only 16.6%. Production as of June 7, 2014 was 10,160 boepd gross (8,430 boepd net) from 36 wells primarily producing from the Buda/Georgetown and was 82% oil. Additional reservoir development opportunities are in the Glen Rose, Edwards, Eagle Ford, James Lime, and Bossier formations. The project development is self-funding with exceptional drilling economics, including over 100 Proved locations with >100% IRR. Total Net Proved Reserves of 30 MMbo (51 MMboe) with a PV10 of $1,343MM. Additional Probable and Possible Reserves of 42 MMbbl oil (62 MMboe) with a PV10 of $1,006MM. Anderson King served as technical advisor to TreadStone. 3
TreadStone Sale to Energy & Expl. Total Purchase Price Net Prod. as of 6/7/14 $ per boepd Net Acreage $ per net acre
$715 MM 8,430 boepd $84,816 / boepd 18,300 Acres $39,071 / Acre
Gross Production Volumes, Avg. Daily Rate per Month >10,000 BOEPD
Recent Case Studies
February, 2014
Devon Energy Corporation (“Devon”) closed on the purchase of Eagle Ford assets from GeoSouthern Energy Corporation (“GeoSouthern”) for $6.0 Billion in February 2014. The sale included 82,000 net acres located in the core of the Eagle Ford in DeWitt & Lavaca Counties, as evidenced by the highest average initial production rates in the entire play. GeoSouthern’s business plan showed over 400 MMboe net risked reserve potential with production expected to grow 25% each year and peak at 140 Mboepd over the next 5 years. At the time of the PSA signing, there were 18 active rigs with
GeoSouthern Sale to Devon Energy Total Purchase Price
1,200 available undrilled locations. Average estimated
$6,000 MM
ultimate recoveries in DeWitt County exceed 800 Mboe per
Current Net Production
53,000 boepd
well.
Net Dewitt Co. Acreage
49,500 Acres
Net Lavaca Co. Acreage
32,500 Acres
Total Net Acreage
82,000 Acres
Anderson King served as technical advisor to GeoSouthern and Blackstone. 4
Key Technical Learnings Confirming the type curves and infill spacing are the most important determinates in ongoing value for the acquirers Early pad drilling commitment yields capital savings and much higher total recoveries LTM production growth and aggressive rig activity builds considerable momentum in sales process Downspacing not a ‘sequential’ option in these heavily stimulated completions - have to commit to final closer spacing very early Volumetrics difficult in these formations, but provide an important check in outlining development strategy Confirmation of future drilling and completion cost efficiencies directly drive payout, return, and capital capacity
5
Key Transaction Considerations Taking the asset through a substantial portion of the HBP requirements avoids leasehold discounts Keep it clean - these predominately oil and water production operations cause a higher sensitivity to environmental concerns Prepare and organize title records to facilitate a smooth close Private sellers want to ‘walk away’ after closing, but must be willing to work hard on diligence issues and transaction concerns The right buyer has confidence in its future capital program and unique motivations to secure the deal Both transactions were classic ‘win-win’ deals - very proud to be a part of them Buyer universe is constantly changing - choose an advisor that is in the market continuously
6
Contact Us
One Energy Square, Suite 660 4925 Greenville Avenue Dallas, TX 75206 214.270.0840 AndersonKingEnergy.com
Bill Anderson, PE
Randy King
Jon Dormer
Managing Partner 214.270.0846
Managing Partner 214.270.0843
Partner 214.850.3824
[email protected]
[email protected]
[email protected]
7
Acquisition & Divestiture Specialists Our managing partners’ collective experience includes 22 years as reserve consultants with Netherland, Sewell, & Associates, Inc.; 30 years as senior advisors at Petrie Parkman, Bank of America Merrill Lynch, and Anderson Oil & Gas, Inc.; and 18 years as industry executives at Exxon and Wynn-Crosby Energy. We have participated in approximately 190 deals with a total value of over $87 billion.
Since inception in 2012, Anderson King Energy has completed 13 transactions totaling over $10.5 billion GeoSouthern & Blackstone, Wolf Exploration, TreadStone
2014
SemGroup (Midstream), High Point (Utica), Alta Energy Partners Canada, Burnett Oil 2013
BXP, Vada, Private PA-Marcellus Transaction, Saddle Butte Pipeline, LLOG, Plano Petroleum
2012
2009
Over 180 upstream asset and private company sales totaling
2006
over $76 billion in value (1993-2011) 1993
Bill Anderson
Randy King
Managing Partner
Managing Partner
Careers built on reservoir engineering, transaction consulting, and client service Continuous involvement in the asset market for decades 1
Market Outlook LTM E. & S. TX A&D Transactions (>$75MM) Date Announced Buyer 6/16/2014 ENXP
Seller
TreadStone
Proved Net Price Reserves Production ($MM) (MMBOE) (BOEPD) $715 33 8,430
5/21/2014 Sanchez Energy
Royal Dutch Shell
$554
5/15/2014 Panhandle O & G
Undisclosed
$80
60
24,000
106
733
2
RKI E&P / Ram 5/9/2014 Energy / Scout Energy
Chaparral Energy
5/7/2014 Encana
Freeport‐McMoRan
5/6/2014 PT Saka
Swift Energy
4/29/2014 Undisclosed Memorial Prod. 3/25/2014 Partners 2/26/2014 New Gulf Res
Encana Corp.
$530
33
17,867
Alta Mesa Holdings
$173
7
1,650
Halcon
$450
16
3,800
2/7/2014 Baytex
Aurora
$2,350
79
22,500
$3,100
59
53,000
$175
$9.23
$23,083
$5,226
$109,686
$45,296
GeoSouthern
$6,000
400
53,000
Halcon
$302
21
4,500
9/10/2013 Marathon Oil Corp. 9/9/2013 Sanchez Energy
Undisclosed Rock Oil Co.
$97 $220
11
2,000
$108
7/31/2013 KKR
EXCO Resources
$131
7/16/2013 Meidu Holdings 7/15/2013 Memorial LP
Woodbine Holdings Memorial LLC
$535 $603
7/3/2013 EXCO Resources
Chesapeake
$680
7/1/2013 QR Energy
Undisclosed
$109
46
$52.54
$58,491
8
9/12/2013 Undisclosed
Enervest
Value Value Value Life ($/Proved BOE) ($/BOEPD) ($/ACRE) (R/P) $21.80 $84,816 $39,071 11 7
90
$68,132
$15.90
$29,664 $104,848
83
$27.61
$118,421
22
$29.86
$104,444 $106,335
13 82
5 4
3
$21,084
$23.38
$5,889
$5,422
$113,208
$14.25
$67,111
$19.64
$110,000
$73,171
Dimmit/LaSalle/Webb
5
Karnes
12
Leon/Madison/Grimes
‐176 operated producing wells; 200 drilling locations; 60% liquids.
10 Karnes/Atascosa/Live Oak ‐Corp. Acquisition Brazos/Madison/ Grimes ‐Vess to operate assets. 21
DeWitt/Lavaca
13 $20,208 $61,111
Comments
‐Delaware Basin / Ft. Worth Basin / Ark‐La‐Tex Assets ‐Ark‐La‐Tex assets with prod ~1,000boepd (24% liquids) with Eagle Ford & Woodbine targets bought by Ram. Karnes/Wilson/Atascosa ‐~400 drilling locations ‐Swift & PT Saka to jointly develop Eagle Ford props with Swift continuing as operator. ‐PT Saka to pay Swift $175MM ($125MM cash at Webb closing & $50MM cash to carry portion of future field dev. costs) to acquire 36% full participating interest in properties. Leon/Robertson ‐97% natural gas.
12
$8,308 $15.00
County(ies) Houston/Madison
LaSalle/Frio
$201
GE Energy & Vess Oil 11/20/2013 Devon 1/8/2014
Net Acreage (000) 18
‐Halcon's non‐core conventional assets in north TX. ‐Marathon's core south TX EF position.
16
McMullen ‐KKR & EXCO to form JV targeting Eagle Ford assets. ‐KKR to acquire 50% interest in undev. Eagle Ford acreage for $131MM & to fund & own 75% of future dev. EXCO to fund & own remaining 25%.
28 46
6
Total (20 Deals): $17.1 Billion
5,000 7,550
15 136
6,100
55
900
$18.90 $13.16
$18.20
685+ thousand net acres
2
$107,000 $79,868
$35,430 $4,434
$111,475
$12,364
$121,333
16 17
19
Brazos/Madison/Grimes ‐Corp. Acquisition ‐48% Permian/31% ETX/21% Rockies Zavala/Dimmit/La Salle/Frio ‐Ark/La/Tex Assets
Recent Case Studies
July, 2014
Energy & Exploration Partners, Inc. (“ENXP”) closed on the purchase of Buda-Rose assets from TreadStone Energy Partners, LLC (“TreadStone”) for $715 Million in July 2014. The assets, located in Houston & Madison Counties, included 18,300 net contiguous, HBP acres in the core of the East Texas Buda-Rose play with an average royalty burden of only 16.6%. Production as of June 7, 2014 was 10,160 boepd gross (8,430 boepd net) from 36 wells primarily producing from the Buda/Georgetown and was 82% oil. Additional reservoir development opportunities are in the Glen Rose, Edwards, Eagle Ford, James Lime, and Bossier formations. The project development is self-funding with exceptional drilling economics, including over 100 Proved locations with >100% IRR. Total Net Proved Reserves of 30 MMbo (51 MMboe) with a PV10 of $1,343MM. Additional Probable and Possible Reserves of 42 MMbbl oil (62 MMboe) with a PV10 of $1,006MM. Anderson King served as technical advisor to TreadStone. 3
TreadStone Sale to Energy & Expl. Total Purchase Price Net Prod. as of 6/7/14 $ per boepd Net Acreage $ per net acre
$715 MM 8,430 boepd $84,816 / boepd 18,300 Acres $39,071 / Acre
Gross Production Volumes, Avg. Daily Rate per Month >10,000 BOEPD
Recent Case Studies
February, 2014
Devon Energy Corporation (“Devon”) closed on the purchase of Eagle Ford assets from GeoSouthern Energy Corporation (“GeoSouthern”) for $6.0 Billion in February 2014. The sale included 82,000 net acres located in the core of the Eagle Ford in DeWitt & Lavaca Counties, as evidenced by the highest average initial production rates in the entire play. GeoSouthern’s business plan showed over 400 MMboe net risked reserve potential with production expected to grow 25% each year and peak at 140 Mboepd over the next 5 years. At the time of the PSA signing, there were 18 active rigs with
GeoSouthern Sale to Devon Energy Total Purchase Price
1,200 available undrilled locations. Average estimated
$6,000 MM
ultimate recoveries in DeWitt County exceed 800 Mboe per
Current Net Production
53,000 boepd
well.
Net Dewitt Co. Acreage
49,500 Acres
Net Lavaca Co. Acreage
32,500 Acres
Total Net Acreage
82,000 Acres
Anderson King served as technical advisor to GeoSouthern and Blackstone. 4
Key Technical Learnings Confirming the type curves and infill spacing are the most important determinates in ongoing value for the acquirers Early pad drilling commitment yields capital savings and much higher total recoveries LTM production growth and aggressive rig activity builds considerable momentum in sales process Downspacing not a ‘sequential’ option in these heavily stimulated completions - have to commit to final closer spacing very early Volumetrics difficult in these formations, but provide an important check in outlining development strategy Confirmation of future drilling and completion cost efficiencies directly drive payout, return, and capital capacity
5
Key Transaction Considerations Taking the asset through a substantial portion of the HBP requirements avoids leasehold discounts Keep it clean - these predominately oil and water production operations cause a higher sensitivity to environmental concerns Prepare and organize title records to facilitate a smooth close Private sellers want to ‘walk away’ after closing, but must be willing to work hard on diligence issues and transaction concerns The right buyer has confidence in its future capital program and unique motivations to secure the deal Both transactions were classic ‘win-win’ deals - very proud to be a part of them Buyer universe is constantly changing - choose an advisor that is in the market continuously
6
Contact Us
One Energy Square, Suite 660 4925 Greenville Avenue Dallas, TX 75206 214.270.0840 AndersonKingEnergy.com
Bill Anderson, PE
Randy King
Jon Dormer
Managing Partner 214.270.0846
Managing Partner 214.270.0843
Partner 214.850.3824
[email protected]
[email protected]
[email protected]
7
