August 29, 2016 Covering the Week of August 22-26, 2016
Energy Week in Review A&D Week in Review Key Industry Indicators To paste the arrows with colors, Current Week's % Let’s follow these guidelines when sorting articles: PDC Energy acquired ~57,000 net acres in the Core • FactSet Indicator Value Change Change Direction • First priority: Domestic A&D, ranked by size Delaware Basin through its acquisition of Arris Petroleum • Settings Prompt Oil Price ($/bbl) $47.64 ($0.88) (1.8%) • Next: Domestic M&A Corp and 299 Resources LLC, portfolio companies of • Presentation Linking and Formatting • Then: US companies doing international deals (like Kimmeridge Management Co., for $1.5 billion Prompt Gas Price ($/mmbtu) $2.89 $0.31 12.0% • Import Wkly Trans. Value ($mm) $1,505 ($879) (37%) Noble’s Tamar) Blackstone Energy Partners and Jetta Operating Company, • Colors • Then: Others (Cabot’s Lackawanna) Inc. announced the formation of Jetta Permian, LP, a Wkly Trans. Count 2 (4) (67%) • Change Color font… • Then: Prices, rig count, completions, etc. partnership that will target assets and leasehold in the US Rig Count 489 (2) (0.4%) Delaware Basin with $1.0 billion of capital committed from US Oil Prod'n (mmbbl/d) 8.5 (0) (0.6%) Blackstone and Jetta’s partners US Gas Prod'n (bcf/d)(1) 89.3 (0) (0.1%) Guidon Energy and Blackstone Energy Partners announced US Oil Storage (mmbbl) 523.6 3 0.5% their recently formed platform company in the Midland Basin US Gas Storage (tcf) 3.4 0 0.3% and the purchase this year of 16,000 net acres in the core of Global Oil Prod'n (mmbbl/d)(2) 96 1 1.3% Martin County, Texas Global Oil Storage (mmbbl)(2) 4,293 142 3.4% Quarterly Deal Activity Asset Corporate Number of Transactions $40 200 180 $35 $30.8 160 $30 $27.0 $28.5 140 $25 120 $20 $16.3 100 $14.7 $9.6 $15 80 $10.0 $9.7 60 $10 $8.1 $4.4 40 $5 $2.1 20
-- -- Transaction Value ($bn) Value Transaction 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 of Transactions Number % Oil 69% 52% 77% 21% 61% 82% 76% 79% 52% 54% 83%
In Commodities, ECM and DCM, let’s go to journalism Commodities WTI continues to bounce around a bit, with the overall trend pointing lower, despite alternating up/down days over the last week resulting from speculation over OPEC production freezes. The fact is that Iran may very well not support an oil standards, even though that’s not how we get the text from freeze given that they still haven’t achieved pre-sanction levels of production while every other country produces all out. those groups. Main change is that any number below 10 is Obviously if a production freeze is agreed upon in September, better to have one’s production at the highest levels spelled out (one instead of 1). This does not apply to possible, because no matter what production levels are, the market will probably move significantly higher on the news of statistical analyses, percentages, or money, of course. a freeze. The near-term contract opened the week at $48.52 and closed the week at $47.64, down $0.88, or 1.8%. There is no slowing in the gas market as prices have settled higher every day this week. Momentum shifted on Monday when the first model showed continued heat in the last week of August and models remained supportive into the last day For the primary Commodities bullet points on oil and gas of the week. The curve is catching the largest rally in the front few months and the Oct16/Jan17 spread illustrated this prices, please start with “The near-term contract opened the move perfectly, as that spread has compressed nearly $0.10 on the week. The near-term contract opened the week at week at $___” and end that same bullet point with “The $2.58 and closed the week at $2.89, up $0.31, or 12.0%. near-term contract closed the week at $____, down(up) $___, or ___%.” You don’t have to use exactly those words Equity S&P E&P(3) underperformed last week (1.0%) vs. SPX(3) (0.7%) as long as the opening and closing prices are included . For Fed Chair Janet Yellen stated that the case for an increase in short-term interest rates has strengthened in recent months. Markets Ending two months of public silence about her views, Yellen cited “continued solid performance of the labor market” and example, you could write, “Opening the week at $45.21, the said the “case for an increase in the federal funds rate has strengthened in recent months” in her speech in Jackson Hole. near-term oil contract declined steadily based on …” – you Attention will turn to U.S. payroll numbers which report next Friday, Sept. 2nd. know, think like a journalist, be creative. Debt There were no high yield issuances last week Markets Year-to-date volume for 2016 stands at $212.9 billion, down 27.5% compared to $293.7 billion by this point in 2015 Retail cash inflows to U.S. high yield mutual funds totaled $161.8 million last week, continuing on the prior week’s inflows of $888.9 billion This brings total inflows for 2016 to $9.8 billion, compared to $3.1 billion of outflows for the comparable 2015 period There were no HY E&P issuances last week
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, EIA 1 Note: Current quarter’s data is through the week covered by this issue. 1. U.S. gas production reported monthly as of May 2016. 2. Global oil production and global oil storage reported monthly as of October 2015 and annually as of 2014, respectively. 3. S&P E&P = S&P Oil & Gas E&P Select Industry, SPX = S&P 500 Index, ADTV = average daily trading volume, ML HY = Merrill Lynch U.S. HY Index. August 29, 2016
Recent A&D Transactions (>$20 mm) Ann'd Proved Prod. Net Date Buyer Seller Area Asset Description Value(1) Multiple Multiple Acres ($mm) ($/boe) ($/boe/d) ($/acre)
23-Aug-16 PDC Energy Arris Pet.; 299 Resources Permian 57,000 net acres in Delaware Basin $1,505 n.a. $215,000 $26,404
18-Aug-16 Jones Energy American Energy Partners LP Mid-Continent 18,000 net acres in SCOOP/STACK $137 n.a. n.a. $7,583
18-Aug-16 Undisclosed Buyer Continental Resources Inc Bakken 80,000 net acres in ND and MT $222 n.a. $79,286 $2,775 Asset descriptions are all hard-coded and need to be adjusted if new deals are added 15-Aug-16 Concho Resources Inc Reliance Energy Inc Permian 40,000 net acres in Midland Basin $1,625 $37.79 $162,500 $40,625 15-Aug-16 Parsley Energy LP BTA Oil Producers LLC Permian 9,140 net acres in Midland Basin $400 n.a. n.a. $43,764
10-Aug-16 Saddle Resources Chesapeake Other 214,000 net acres in Barnett $420 $5.19 $6,462 $1,953
08-Aug-16 SM Energy Rock Oil Company LLC Permian 24,783 net acres in Midland Basin $980 n.a. $200,000 $39,543
03-Aug-16 Protege LLC; Undisclosed Newfield Exploration Eagle Ford Eagle Ford and South Texas gas $388 n.a. $30,551 $5,006
02-Aug-16 Undisclosed Buyer Continental Resources Inc Mid-Continent ~29,500 net acres SCOOP $281 n.a. $510,909 $9,525
02-Aug-16 Jones Energy EOG Mid-Continent 26,000 net acres in Anadarko Basin $27 n.a. $31,882 $1,042
LTM By Commodity LTM By Region LTM By Buyer Type
Gas 21% Other Other Permian 24% Public 34% 30% Company MLP 41% 2% Private 11% Bakken PE / PE- Oil Ark-La-Tex 7% Backed 79% 5% 22% Appalachia Eagle Ford Mid-Con 7% 5% 12% A&D Valuation Trends(2)
Sales Value / R / P Proved Reserves (15:1) $60.00 y = 31.747e-0.065x (ratio) ($ / boe) ($ / mcfe) $50.00 R² = 0.3668 8x $18.73 $1.25 10x $16.49 $1.10 $40.00 15x $12.00 $0.80 20x $8.73 $0.58 $30.00
$20.00
Sales Sales Price Proved / $10.00 Reserves Reserves 15:1) ($/boe
-- -- 5.0x 10.0x 15.0x 20.0x 25.0x R / P Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg 2 1. Represents total enterprise value. 2. 100 transactions from Jan 2013 to 2016YTD with transaction value >$20mm. Adjusted for changes in price outlooks. Recalculated boe reserves are on a 15:1 (gas:oil) basis. Acreage transactions excluded by using deals with PDP of >= 40% of total proved. August 29, 2016
Select Significant Deals on the Market
Bakken 1 Deal Appalachia 3 Deals 8/26/2016 Rockies Appalachia 3 4 Deals Ark-La-Tex 4 Bakken 1 Eagle Ford 7 Mid-Con 12 Mid-Con Other 8 12 Deals Permian 15 BMO Deals (Status) Rockies 4 Ark-La-Tex EOG Haynesville (Post Bid) Permian 4 Deals Comstock S. TX (Post Bid) 15 Deals Newfield Eagle Ford (Announced) Newfield S. TX (Announced) Eagle Ford
7 Deals Other 8 Deals
For more detail contact Chelsea Neville at [email protected]
Energy Headlines A&D Headlines Macro E&P Headlines
PDC Energy Announces Entry Into the Core Delaware Basin Oil Prices Fall as Saudi Arabia Dampens Output Freeze Through Transformative Acquisition of Approximately Prospects 57,000 Net Acres E&P Headlines Iran Sets Terms for Cooperating with OPEC Blackstone Energy Partners and Jetta Form Pure Play Delaware Basin Acquisition Partnership – Jetta Permian, LP Oil Industry Shifts From Survival to Growth
Guidon Energy and Blackstone Energy Partners Announce Dark Clouds Loom for Oil as China Chases Blue Skies for a New Permian Basin Platform and First Asset Acquisition G-20
Mexico Approves Oil Auction Terms for Onshore Tender in 2017
Lighter Stuff
(Click headline to link to the full article)
Disclaimer: The foregoing links are for convenience only and relate to materials that were not prepared or reviewed by BMO Capital Markets. 3 BMO Capital Markets takes no responsibility for and makes no representations with respect to the contents thereof. These materials may be inconsistent with the views of BMO Capital Markets. Source of Select Significant Deals on the Market: IHS, 1Derrick August 29, 2016
Interesting Deal of the Week: PDC Energy Acquires ~57,000 Net Acres in the Delaware Basin
TRANSACTION SUMMARY ACQUIRED ASSET
On 23-Aug-16, PDC Energy, Inc. (“PDC” or the Delaware Midland “Company”) (NASDAQ: PDCE) announced that it had Basin Basin entered into definitive agreements to acquire two privately held companies, Arris Petroleum and 299 Resources, managed by Kimmeridge Energy Management Company for ~$1.5 billion Central Transaction Highlights: Basin Platform ~57,000 net acres in the Core Delaware Basin – ~41,000 net acres in Reeves County, Texas – ~16,000 net acres in Culberson County, Texas Western LOVING
~7,000 boe/d of net production (42% oil, 65% liquids)
More than 700 gross estimated horizontal drilling locations (Wolcamp A, B, and C) CULBERSON WARD ~530 mmboe of preliminary estimated net reserve potential based on combined total of only four to Central twelve wells per section Eastern REEVES Consideration for the transaction includes $915 million of cash and ~9.4 million shares of PDC common stock PECOS privately placed to the sellers (value of ~$590 million)
BMO is one of four bookrunners providing underwritten financing for both upsized commitments to the revolver and for bridge financing
OBSERVATIONS ACQUISITION METRICS(1)
Opportunity to target multiple horizontal benches in Current Production (boe/d) 7,000 Wolfcamp A, B, and C and other additional intervals Flowing Production Multiple ($/boe/d)(1) $35,000 Significant upside potential through downspacing Implied Current Production Value ($ mm) $245 Scalable owned and operated midstream infrastructure including gas gathering systems, Purchase Price ($ mm) $1,505 pipelines, right-of-ways, and five SWD wells Less: Current Production Value ($ mm) (245) Adjusted for current production, PDC acquired the Implied Acreage Value ($ mm) $1,260 acreage at $22,105/acre(1)
Diamondback-Luxe (12-Jul-16): ~$30,000/acre Total Net Acres 57,000
Silver Run-Centennial (06-Jul-16): ~$35,000/acre Implied Acreage Multiple ($/acre) $22,105
Centennial-Caird (25-Apr-16): ~$17,000/acre
Concho-Jetta (18-Jan-16): ~$19,500/acre
Source: Company filings and presentations 4 1. $35,000 per flowing boe adjustment; PDC acquisition press release (23-Aug-16). 2. $35,000 per flowing boe adjustment; Diamondback acquisition press release (12-Jul-16). 3. $35,000 per flowing boe adjustment; Silver Run acquisition press release (06-Jul-16). 4. $35,000 per flowing boe adjustment; Centennial acquisition press release (25-Apr-16). 4. $35,000 per flowing boe adjustment; Concho acquisition press release (18-Jan-16). August 29, 2016
Commodity Prices
WTI OIL (HISTORICAL / FORECAST)
$80 NYMEX WTI Futures as of 26-Aug-16 Close ($/bbl) NYMEX Gas Futures as of 26-Aug-16 Close ($/mmbtu) $70 Link to Detailed Link to Detailed (1) Historical Graph Futures Graph Period Current Last Wk. 6 Mo. Ago 1 Yr. Ago $60 12 Mo. Strip $50.29 $51.19 $37.50 $39.53 2016 $48.32 $49.42 $36.94 $44.24 $50
2017 $51.51 $52.47 $41.41 $49.52 ($/bbl) $40 2018 $53.66 $54.42 $43.67 $53.13 Links: $30 2019 $54.94 $55.73 $45.15 $55.60 http://www.nasdaq.com/markets/crude-oil.aspx 2020 $56.01 $56.87 $46.33 $57.35 http://www.bloomberg.com/quote/CL1:COM $20 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 http://www.nasdaq.com/markets/natural-gas.aspx http://www.bloomberg.com/quote/NG1:COM
HENRY HUB NATURAL GAS (HISTORICAL / FORECAST)
$4
NYMEX Gas Futures as of 26-Aug-16 Close ($/mmbtu) $3 Period(1) Current Last Wk. 6 Mo. Ago 1 Yr. Ago 12 Mo. Strip $3.09 $2.92 $2.16 $2.90 $2 2016 $3.01 $2.75 $2.07 $2.96 2017 $3.12 $3.01 $2.49 $3.08 ($/mmbtu) Link to Detailed Link to Detailed $1 Historical Graph Futures Graph 2018 $2.97 $2.95 $2.57 $3.16 2019 $2.95 $2.95 $2.62 $3.22 2020 $3.02 $3.04 $2.72 $3.32 -- Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
NGL PRICING(2)
NGL as % of WTI 60% Historical Prices as of 26-Aug-16 Close ($/gal) 50% NGLs Current Last Wk. 6 Mo. Ago 1 Yr. Ago Ethane $0.18 $0.17 $0.14 $0.19 40% Propane $0.48 $0.46 $0.42 $0.34
Butane $0.59 $0.58 $0.53 $0.45 % of WTI of % 30% Iso-butane $0.64 $0.66 $0.54 $0.48 Pentane+ $1.06 $1.09 $0.75 $0.78 20% Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, FactSet 5 1. 2016 = September 2016 to December 2016 average; rest are calendar year average unless stated otherwise. 2. Assumes typical Gulf Coast barrel composition. August 29, 2016
Commodity Prices (cont’d) MAPS IN MASTER VIEW OIL PRICING & DIFFERENTIALS TO CUSHING WTI ($ / BBL) – AS OF 26-AUG-16
Legend Clearbrook Price Diff. $46.64 WCS ($1.00) $49.92 $32.92 $2.28 ($14.72) East Coast U.S. (Brent) Cushing $47.64
Midland St. James Midland Sweet- (LLS) Sour Spread $46.95 ($1.21) ($0.69) $48.95 $1.31
NATURAL GAS PRICING & DIFFERENTIALS TO HENRY HUB ($ / MMBTU) – AS OF 26-AUG-16
Legend Sumas $1.86 AECO Price $2.64 ($1.03) ($0.25) Diff. Transco $2.73 CIG Chicago ($0.16) $3.35 Northern $2.58 $2.83 Dominion California $0.46 ($0.31) ($0.06) Panhandle $1.82 $2.63 ($1.07) $2.64 ($0.26) ($0.25) $2.83 ($0.06) El Paso - SJ
Southern $2.62 Waha California ($0.27)
HSC $2.85 ($0.04) Henry Hub $2.89
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg 6 Note: Prices and differentials are for prompt month futures except for Clearbrook which is based on spot prices. August 29, 2016
Permian Snapshot
Item Value Wkly Change Last Week Item Value Wkly Change Last Week Rig Count 199 3 196 Oil Differential ($0.40) ($0.30) ($0.10) Permitting Activity 113 (35) 148 Gas Differential ($0.19) ($0.06) ($0.13)
RIG COUNT DIFFERENTIALS Midland Waha 400 D H V $2.00 $0.20 300 -- -- 200
100 ($2.00) ($0.20) mmbtu $ / $ bbl $ /
-- ($4.00) ($0.40) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
751 V H D Oil Gas 2,007 709 683 635 653 669 2,000 8,000 568 582 551 562 474 480 473 1,800 7,000 1,600 6,000
1,400
mbbl/d mcf/d 1,200 6,912 5,000 1,000 4,000 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/boe) ($/boe/d) ($/acre) 23-Aug-16 PDC Energy Arris Pet.; 299 Resources 57,000 net acres in Delaware Basin $1,505 n.a. $215,000 $26,404 15-Aug-16 Concho Resources Inc Reliance Energy Inc 40,000 net acres in Midland Basin $1,625 $37.79 $162,500 $40,625 Asset descriptions are all hard-coded and need to be 15-Aug-16 Parsley Energy LP BTA Oil Producers LLC 9,140 net acres in Midland Basin $400 n.a. n.a. $43,764 adjusted if new deals are added 08-Aug-16 SM Energy Rock Oil Company LLC 24,783 net acres in Howard County $980 n.a. $200,000 $39,543 27-Jul-16 Four Corners Petroleum Whiting Petroleum 62,900 net acres in Delaware Basin $300 $2.49 $34,884 $4,769 Mean $962 $20.14 $153,096 $31,021 Median $980 $20.14 $181,250 $39,543
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$120 $400,000 Recent: $100 Recent: $300,000 $215,000 $80 $37.79 $60 $200,000 $40 $20 $100,000
$ / boe /$ -- --
$ boe/d $ /
2Q13 2Q15 3Q15 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 4Q15 1Q16 2Q16 3Q16
4Q13 1Q16 1Q13 2Q13 3Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q16 3Q16 # Deals 3 5 3 6 2 3 7 4 1 2 3 2 2 3 3 # Deals 4 6 6 6 3 7 9 6 1 3 8 8 5 8 9
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 7 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Eagle Ford Snapshot Item Value Wkly Change Last Week Item Value Wkly Change Last Week Rig Count 35 (1) 36 Oil Differential $1.55 ($0.05) $1.60 Permitting Activity 72 20 52 Gas Differential ($0.05) ($0.01) ($0.04)
RIG COUNT DIFFERENTIALS
LLS HSC D H V $8.00 $0.40 250 $6.00 200 $4.00 $0.20 150 $2.00
100 -- -- $ / mmbtu $ / 50 bbl $ / ($2.00) -- ($4.00) ($0.20) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
V H D 437 2,500 Oil Gas 12,000 418 397 325 331 8,985 285 278 296 247 241 237 2,000 10,000 196 223
mbbl/d 1,500 8,000 mcf/d 1,550 1,000 6,000 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/boe) ($/boe/d) ($/acre) 29-Apr-16 EnerVest GulfTex Energy Primarily in Karnes Co., TX $501 $4.56 $58,473 $119,343 29-Apr-16 EnerVest BlackBrush Primarily in Karnes Co., TX $674 n.a. $130,368 $95,522 Asset descriptions are all hard-coded and need to be 27-Jan-16 Carrier Energy Partners II AWE Karnes Co., TX $199 $8.16 $48,126 $82,917 adjusted if new deals are added 18-Jan-16 Carrier Energy Partners II Empyrean Energy Plc Karnes Co., TX $62 $9.35 $49,200 $84,362 31-Dec-15 Undisclosed Buyer Clayton Williams Energy Burleson Co., TX $22 n.a. n.a. n.a. Mean $291 $7.36 $71,542 $95,536 Median $199 $8.16 $53,837 $89,942
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$60 $150,000 Recent: $50 Recent: $40 $100,000 $58,473 $30 $4.56 $20 $50,000 $10
$ $ boe/ -- --
$ boe/d $ /
4Q13 1Q16 1Q13 2Q13 3Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q16 3Q16
2Q13 2Q15 3Q15 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 4Q15 1Q16 2Q16 3Q16 # Deals 3 2 2 3 3 5 2 2 1 1 3 0 2 1 0 # Deals 4 4 2 4 3 6 3 3 1 1 3 1 2 2 1
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 8 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Ark-La-Tex Snapshot Item Value Wkly Change Last Week Item Value Wkly Change Last Week Rig Count 14 -- 14 Oil Differential $1.55 ($0.05) $1.60 Permitting Activity 22 2 20 Gas Differential ------
RIG COUNT DIFFERENTIALS
D H V LLS HSC $8.00 $0.40 60 50 $6.00 40 $4.00 $0.20 30 $2.00 -- -- 20 mmbtu $ / 10 bbl $ / ($2.00) -- ($4.00) ($0.20) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
V H D 200 Oil Gas 10,000 191 9,000 153 7,202 150 120 118 8,000 83 94 88 81 68 78 70 75 7,000
50 mbbl/d 100 mcf/d 6,000 103 50 5,000 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/mcfe) ($/mcfe/d) ($/acre) 26-Jul-16 Chesapeake Freeport-McMoRan 72,000 net acres and 1,450 wells $87 n.a. n.a. $1,208 06-Jun-16 Undisclosed Buyer Devon Energy Panola Co., TX $525 $1.01 $3,977 n.a. Asset descriptions are all hard-coded and need to be 15-May-16 Range Resources Corp Memorial Resource Dev. Terryville Field, LA $4,400 $3.19 $10,483 $19,299 adjusted if new deals are added 18-Mar-16 Covey Park Energy LLC EP Energy Corp De Soto & Bossier Pa., LA $420 $2.05 $3,717 $12,293 29-Feb-16 KJ Energy LLC Cabot Cotton Valley $57 $3.41 n.a. n.a. Mean $1,098 $2.42 $6,059 $10,933 Median $420 $2.62 $3,977 $12,293
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$3.0 Recent: $15,000 Recent: $2.5 $1.01 $3,977 $2.0 $10,000 $1.5 $1.0 $5,000
$ / mcf/ $ $0.5
$0.0 mcf/d $ / --
2Q13 1Q16 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q16 3Q16
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 # Deals 2 1 2 0 3 2 1 2 0 0 4 0 2 2 0 # Deals 2 1 2 1 1 3 2 3 0 0 4 1 1 2 0
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 9 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Appalachia Snapshot
Item Value Wkly Change Last Week Item Value Wkly Change Last Week Rig Count 38 -- 38 Oil Differential $2.03 ($0.33) $2.36 Permitting Activity 18 4 14 Gas Differential ($1.64) ($0.17) ($1.47)
RIG COUNT DIFFERENTIALS
D H V $15.00 Brent Dominion $2.00 150 $10.00 $1.00 $5.00 100
-- -- $ bbl $ /
($5.00) mmbtu$ / 50 ($1.00) ($10.00) -- ($15.00) ($2.00) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
V H D 150 Oil Gas 24,000 461 488 13,956 445 22,000 384 373 321 291 277 308 289 100 20,000 269 238 18,000 137 16
mbbl/d 50 16,000 mcf/d 14,000 -- 12,000 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/mcfe) ($/mcfe/d) ($/acre) 10-Jul-16 Antero Resources Corp Statoil Wetzel and Tyler Counties, WV $96 n.a. $32,000 $7,385 09-Jun-16 Antero Resources Corp Southwestern Energy West Virginia $450 $40.92 $32,147 $8,182 Asset descriptions are all hard-coded and need to be 16-May-16 Vantage Energy Inc Alpha Natural Resources Greene Co., PA $340 n.a. n.a. n.a. adjusted if new deals are added 02-May-16 EQT Corporation Statoil West Virginia $407 n.a. $8,140 $6,512 01-Mar-16 Benefit Street Partners Rex Energy Corp Butler Co., PA $175 n.a. n.a. n.a. Mean $294 $40.92 $24,096 $7,359 Median $340 $40.92 $32,000 $7,385
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$50 Recent: $50,000 Recent: $40 $40,000 $40.92 $32,000 $30 $30,000 $20 $20,000 $10 $10,000
$ / mcfe / $ -- --
$ $ /mcfe/d
2Q14 3Q16 1Q13 2Q13 3Q13 4Q13 1Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
2Q13 2Q15 3Q15 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 4Q15 1Q16 2Q16 3Q16 # Deals 0 1 1 0 0 0 3 1 0 0 0 0 3 1 0 # Deals 0 1 1 2 1 2 4 3 0 1 0 0 1 2 1
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 10 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Bakken Snapshot Item Value Wkly Change Last Week Item Value Wkly Change Last Week Rig Count 27 -- 27 Oil Differential ($1.00) $0.25 ($1.25) Permitting Activity 12 (15) 27 Gas Differential ($0.31) ($0.07) ($0.24)
RIG COUNT DIFFERENTIALS
D H V $2.00 Clearbrook CIG $0.20 200 -- -- 150 ($2.00) ($0.20) 100 ($4.00) ($0.40)
50 $ mmbtu$ /
$ bbl $ / ($6.00) ($0.60) -- Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 ($8.00) ($0.80) Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
V H D Oil Gas 161 160 153 1,400 1,740 2,000 117 1,200 1,800 88 81 69 79 77 69 1,600 67 68 1,000
46 1,082 1,400
mbbl/d mcf/d 800 1,200
Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 600 1,000 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/boe) ($/boe/d) ($/acre) 18-Aug-16 Undisclosed Buyer Continental Resources Inc 80,000 net acres in ND and MT $222 n.a. $79,286 $2,775 01-Aug-16 Undisclosed Buyer SM Energy 76,000 net acres in Williston $173 $18.16 $52,273 $2,270 Asset descriptions are all hard-coded and need to be 14-Jun-16 Lime Rock Resources Natural Resource Partners Non-operated WI Williston $116 $11.54 $33,642 $5,413 adjusted if new deals are added 27-May-16 Undisclosed Buyer Arsenal Energy Inc Mountrail Co., & Williams, ND $34 $5.05 $44,156 n.a. 25-May-16 New Emerald Holdings Emerald Oil Inc McKenzie Co., ND $73 n.a. $12,836 $849 Mean $124 $11.58 $44,439 $2,827 Median $116 $11.54 $44,156 $2,522
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$200 $200,000 $150 Recent: $150,000 Recent: $100 $18.16 $100,000 $79,286 $50
$ / boe /$ $50,000
-- boe/d $ / --
2Q13 1Q16 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q16 3Q16
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 # Deals 1 2 4 1 3 1 4 1 0 0 1 2 0 2 1 # Deals 1 4 6 1 4 2 6 2 0 0 1 3 0 3 2
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 11 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Mid-Continent Snapshot
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Rig Count 47 -- 47 Oil Differential ------
Permitting Activity 32 (35) 67 Gas Differential ($0.26) ($0.02) ($0.23)
RIG COUNT DIFFERENTIALS
D H V $0.20 Cushing Panhandle $0.20 200
150 -- -- 100
($0.20) ($0.20) $ mmbtu$ /
50 bbl $ /
-- ($0.40) ($0.40) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-15 Jun-15 Nov-15 Apr-16 PERMITTING ACTIVITY BY MONTH GROSS PRODUCTION
V H D 318 Oil Gas 305 305 286 800 15,000 253 8,322 222 216 198 203 600 171 175 170 160 10,000 400 252 mbbl/d 5,000 200 mcf/d
-- -- Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 TRANSACTION ACTIVITY Ann'd Proved Prod. Net Date Buyer Seller Asset Description Value(1) Multiple Multiple Acres ($mm) ($/boe) ($/boe/d) ($/acre) 18-Aug-16 Jones Energy American Energy Partners LP ~18,000 acres in SCOOP/STACK $137 n.a. n.a. $7,583 02-Aug-16 Undisclosed Buyer Continental Resources Inc ~29,500 net acres in SCOOP $281 n.a. $510,909 $9,525 Asset descriptions are all hard-coded and need to be 02-Aug-16 Jones Energy EOG ~26,000 in Anadarko Basin $27 n.a. $31,882 $1,042 adjusted if new deals are added 28-Jul-16 Rimrock Merit Energy ~24,500 net acres in SCOOP $150 n.a. $71,429 $6,122 28-Jul-16 Cornerstone Petroleum Rimrock ~6,125 net acres in SCOOP $38 n.a. $71,429 $6,122 Mean $126 n.a. $171,412 $6,079 Median $137 n.a. $71,429 $6,122
TRANSACTION PROVED RESERVE MULTIPLES(1) TRANSACTION PRODUCTION MULTIPLES(1)
$30 Recent: $250,000 Recent: $25 $200,000 $10.00 $510,909 $20 $150,000 $15 $10 $100,000 $5 $50,000
$ / boe / $ -- --
$ boe/d $ /
4Q14 1Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
2Q13 2Q15 3Q15 1Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 4Q15 1Q16 2Q16 3Q16 # Deals 4 6 2 7 1 1 4 1 0 3 0 0 0 2 0 # Deals 4 6 3 9 2 2 5 4 0 3 1 2 1 5 4
Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, Drilling Info 12 Note: Current quarter’s data is through the week covered by this issue. 1. Represents total enterprise value. Excludes transactions with deal value <$20 million. August 29, 2016
Rig Count Summary This Last Last Week Change Week Year Total Rigs 489 (2) 491 877 Oil 406 -- 406 675 Williston Gas 81 (2) 83 202 27 Miscellaneous 2 -- 2 -- -- Directional 48 3 45 80 Horizontal 379 (3) 382 672 Marcellus Vertical 62 (2) 64 125 DJ-Niobrara Utica 25 16 1 Basin Mississippian 13 (2) (1) Arkoma 2 -- 2 6 3 Barnett 4 (1) 5 7 -- Cana 32 -- 32 40 Granite Wash Cana DJ-Niobrara 16 (2) 18 30 MAPS IN 9 32 Arkoma Fayetteville Eagle Ford 35 (1) 36 97 -- -- 2 -- MASTER VIEW Fayetteville ------4 -- -- Granite Wash 9 -- 9 17 Permian 4 GOM 17 (1) 18 29 199 (1) Haynesville 14 -- 14 31 3 Barnett Haynesville Marcellus 25 1 24 51 14 Eagle Ford Mississippian 3 -- 3 20 -- 35 Permian 199 3 196 255 Legend (1) Utica 13 (1) 14 20 GOM Current Williston 27 -- 27 73 17 Change Other 93 -- 93 197 (1) Contacts TRANSACTIONS NEWSLETTER
Geoff Roberts Howard Barnwell Rob Priske Ani Sen MD & Head of U.S. A&D Director & Transactions Mgr. Director & Transactions Mgr. Associate 713-518-1268 713-546-9767 713-546-9727 713-546-9759 [email protected] [email protected] [email protected] [email protected] Rob Priske Chelsea Neville Director & Transactions Mgr. Transactions Coordinator 713-546-9727 713-546-9703 [email protected] [email protected] Disclaimer This material is prepared by the BMO Capital Markets’ Investment and Corporate Banking Department, for distribution to BMO Capital Markets’ clientele. It is not a product of BMO Capital Markets’ Research Department. The views of the Investment and Corporate Banking Department may differ from those of the Research Department. BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A. (member FDIC), Bank of Montreal Ireland p.l.c, and Bank of Montreal (China) Co. Ltd and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada and Asia and BMO Capital Markets Limited (authorised and regulated by the Financial Conduct Authority) in Europe and Australia. “Nesbitt Burns” is a registered trademark of BMO Nesbitt Burns Inc., used under license. “BMO Capital Markets” is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license. ® Registered trademark of Bank of Montreal in the United States, Canada and elsewhere.™ Trademark of Bank of Montreal in the United States and Canada. Bank of Montreal or its subsidiaries (“BMO Financial Group”) has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets endeavors to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO Capital Markets may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein. All values in this document are in US$ unless otherwise specified.
Source of rig count stats: Baker Hughes 13