While deal making flopped on the world stage in 2015, the supporting cast managed to steal the show.
EnergyNet said 2015 was its best sales year in the A&D advisory firm's 16-year history. Though globally the A&D market suffered, the U.S. market remained robust.
"The A&D market is not frozen, and the bid-ask spread between buyer and seller is not too wide to overcome," Chris Atherton, the firm's president, told Hart Energy. "It may take extra finesse and skilled negotiation, but deals are getting done consistently."
EnergyNet closed $285 million in oil and gas asset transactions last year, edging out the $283.5 million closed in 2014, Atherton said.
In 2015, EnergyNet successfully closed 81% of the assets it marketed. The firm, headquartered in Amarillo, Texas, conducts sealed bid, auction and private transactions.
Globally, analysis revealed that 2015 was the slowest year for upstream oil and gas transactions in more than a decade, Wood Mackenzie said in a January report.
The industry saw average monthly deal counts fall by more than a third in 2015 compared with the preceding 24 months. And deal values collapsed by two thirds last year. Companies announced 14 deals valued at more than $1 billion in 2015 compared with 46 in 2014.
A key to EnergyNet's resilience was an increased interest in noncore assets, which is the firm's bread and butter, according to Atherton.
Noncore asset sales tend to be scattered properties that are individually valued at less than $100 million. These assets are not selling for fire-sale prices, though, Atherton said.
In order to successfully compete, many buyers feel they must pay a premium for assets even in this down market, he said. For producing assets in particular, the cash flow multiples buyers pay have held relatively steady.
"Oddly, it still seems to be a seller’s market, at least from a competition standpoint," he said.
Atherton said sellers in 2015 were led by major oil companies, large independents and private companies including: Royal Dutch Shell Plc (NYSE: RDS.A), Chevron Corp. (NYSE: CVX), Devon Energy Corp. (NYSE: DVN), EnerVest Ltd. and more.
On the flipside, EnergyNet saw 2,260 new qualified bidders register to purchase assets in 2015, an increase of 17% over the firm's five-year average.
Last year buyers were well-capitalized and aggressive, Atherton said. Buyers in 2015 included publicly traded companies, large privately held E&Ps, private equity sponsored management teams and small-to-medium regional operators, he said.
"There is an eagerness to acquire assets in this low price environment with significant upside reward, but there is also trepidation that prices could drop even further," he said.
However, the A&D landscape is already changing, he said. The industry is set to see a wave of fresh buyers as newly-formed companies backed by private equity enter the market.
"Where there was once Samson, Forest, Sabine, Milagro, Quicksilver, ENXP and others, now there is Luxe Energy, Scala Energy, Balidor, Bison, Rebellion, Colgate, Percussion, PCORE II, Terra Energy Partners and other new names entering the A&D space," Atherton said.
Emily Moser can be reached at email@example.com.
VAALCO Energy Inc. said Feb. 18 that the South East Etame 4P appraisal wellbore drilled from the VAALCO operated South East Etame North Tchibala platform offshore Gabon in the Etame Marin permit area successfully encountered oil sands in the Gamba formation.
Improved optimization could enhance the returns sought by oil and gas investors.
Permian operators turn to the edge of the play.