We've brought together the top insights into energy industry trends and best practices in our downloadable eBook, State of the Energy Industry. A helpful resource of industry-leading insights on gas and crude production, job growth within the industry, the current regulatory and political environment, capital markets and private equity investing. We hope you find value in the information we've gathered from industry-leading clients and partners: David Pursell of Tudor, Pickering, Holt & Co., Tom Hargrove of GulfStar Group and James Wallis of Lime Rock Partners.

1. 2013 State of the Industry
Energy

2. Chairman’s Letter
To Our Readers,
At BoyarMiller, when we partner with clients, we work as
a strategic part of their business team, and that means
we have to be experienced in more than just law. We also
need to understand their industry so that we are able to work
collaboratively with them and add value to their business.
That’s why we bring together the top insights into industry trends
and best practices, and deliver it to you. Not only has this information been invaluable to us and to our clients, but we hope
it will be beneficial to you as well.
The information in this publication has been gathered from
industry-leading clients we have partnered with and from our
own energy team. If you find value in it and would like to hear
more, join us for our next BoyarMiller Breakfast Forum.
Sincerely,
Chris Hanslik
Firm Chairman
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3. Table of contents
Introduction
State of the Industry
Natural Gas Production
Crude Oil Production
Job Growth
Expert Insights
Regulatory and Political Environment
Capital Markets
Private Equity Investing
Energy Practice Leaders
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4. Introduction
Your strategic partner should be an
expert in your industry, not just law.
At BoyarMiller, we’re committed to providing insightful, versatile expertise to organizations
of all sizes as we guide them through complex business issues. We know that in order
to understand how best to collaborate with you, we need to know your industry and
your business.
To this end, we gathered the best insights into energy trends and best practices from
industry-leading clients we have partnered with and from our own energy team. It’s our
hope that the information we’ve accumulated through years of collaborative work in the
energy industry will be beneficial for you.
Your strategic
partner requires
knowledge of
trends, industry
and law.
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5. State of the industry
The U.S. manufacturing industry is competing globally again, thanks to lower natural gas prices and a renaissance in the oil and gas energy sector, according to panelists at BoyarMiller’s “Perspectives on the Energy Industry” forum. But, while more
investors are injecting capital into the industry, the lack of sensible long-term energy
policy and fragile global economies continue to have an impact on investor confidence.
Natural Gas Production
70 billion
cubic feet
per day
U.S. natural gas production has increased to more
than 70 bcf/d, even as rig count drops – a sign that
plays are prolific and that producers are becoming
better and more efficient at what they do. Cheap,
plentiful supply has created energy near-independence in the natural gas realm. The market has responded by retiring coal plants in
favor of cheaper coal-fired power generation; by building chemical plants and fertilizer
projects; and with discussion of converting the transportation fleet to natural gas.
Crude Oil Production
5 million
barrels
per day
Reversing a 40-year decline in crude production,
the U.S. has been responsible for nearly all of the net
growth in non-OPEC oil supply. Onshore production
has grown from 3 million to 5 million barrels a day over
the last two years. Because of this increased production and the supply of crude from Canada being transported to the Gulf Coast, crude
prices are low. Producers are, to an extent, suffering from their own success. However,
those that transport and refine the oil are now at an economic advantage.
Job Growth
Oil and gas and supporting industries directly provide
more than 500,000 jobs. Analysts project that number
could double or triple in the coming years as production
in the U.S. continues to increase. The low energy costs
give U.S. manufacturing a competitive advantage,
especially in industries that use oil and gas as direct feedstock.
The growth of these industries will provide millions more jobs.
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500,000
oil and
gas jobs

6. Expert insight
Regulatory & Political Environment
What sets Houston apart?
Houston refineries benefit from the cheap, plentiful crude oil resources being produced
and transported to our area. Companies are able to buy crude at low prices and export
refined product for a significant profit. This benefits the local Houston economy as a whole,
beyond those within the industry.
2013 Regulatory Trends
David Pursell, Managing Director & Head of Securities, Tudor, Pickering, Holt & Co.
• eystone Pipeline or not, Canadian oil will be transported: Canadian crude oil is
K
coming to the Gulf Coast. The options for transportation are repair, connect and reverse
existing pipes; transport on rail cars; or build a new pipeline. The best option with the
least risk is the Keystone Pipeline.
• O2 emissions are down, and everyone is claiming it: CO2 emissions hit a twentyC
year low in 2012 as a result of cheaper natural gas replacing coal in power generation.
Although this meets environmentalist goals of lower emissions, it does not satisfy the
political push toward solar and wind energy.
• Government-mandated ethanol sales will drive gasoline prices up: Because companies
are faced with lower demand for gasoline and higher mandated ethanol sale levels, they
are forced to buy credits or export gasoline without ethanol to avoid blending more than
10% ethanol into gasoline pools. The combination will continue to drive gasoline prices up.
• High crude production risks U.S. disconnecting from global prices: U.S. onshore
production has increased by 2 million barrels a day over the last two years because of
technology and more efficient processes. Because crude cannot be exported, it will build
up on the Gulf Coast, potentially disconnecting low U.S. prices from the global pricing.
As Managing Director and Head of Securities, David Pursell is responsible
for TPH’s analysis of global oil gas markets, including inventory and price
forecasts, supply/demand modeling and rig count/production relationships. He is a board member of private energy companies Oxane Materials and Unconventional Gas Resources. He holds a BS and MS in Petroleum
Engineering from Texas AM University.

7. What sets Houston apart?
Houston’s energy capital market has grown increasingly competitive over the past several
years as investment firms try to take advantage of the better economic climate in the
Houston area and capture a piece of the energy market. Low natural gas prices are
particularly beneficial to Houston because of its ship channel.
2013 Capital Markets Trends
Tom Hargrove, Managing Director, GulfStar Group
• ipeline service companies are in a great position
P
In addition to the stable, recurring revenues from testing and maintenance work to
keep more than 25,000 pipelines across the country meeting the demands of stricter
regulations, new pipeline structure must be constructed to support growing production
in unconventional gas plays.
• Low natural gas prices benefit petrochemical companies
Dow chemical estimates $95 billion in petrochemical plants are on the drawing board.
While not all will be built, the low natural gas prices are driving significant construction
and economic activity. This will benefit Houston and the Gulf Coast financially.
• Middle market MA activity is on the rise
Driven by public companies whose stock prices are at attractive levels and cash
balances are high, MA activity is on the rise because of the large universe of private
equity buyers with liquidity.
• Lenders are increasingly aggressive
Lenders have become relatively aggressive because the energy market is an area where
they can actually make money, instead of lending it at low rates over LIBOR. In addition,
cash flow-based lending is making a return.
Tom Hargrove is a co-founder of GulfStar Group and has more than 30
years of investment banking experience. Prior to GulfStar’s formation, he
served as a Senior Vice President of Rotan Mosle Inc. Tom is a director of
Commercial Alliance Insurance Company and RIMCO Royalty Partners.
He holds a BA in Economics from the University of Texas.
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Expert insight
Capital Markets

8. What sets Houston apart?
The energy industry is very large and capital-intensive, and as the national economy
recovers and energy production hits record highs, there are many opportunities within the
industry to put money to work. That makes it an exciting time for business, and it’s great for
Houston, for Texas and for the U.S.
2013 Private Equity Investing Trends
James Wallis, Vice President, Lime Rock Partners
• Investors feel compelled to play the market – and that’s dangerous
People are looking for places to put money, as they know idle cash is a guaranteed
negative return. The problem with people stepping further and further out on the risk
curve, looking for yield, is that timing the markets is incredibly difficult. Now is not the
time for big, bold, market-calling bets. Diversify and proceed with caution.
• New” technologies are evolutionary, not revolutionary
“
Hydraulic fracturing dates back to 1947. Newer techniques such as simultaneous fracturing, “zipper fracs,” real-time microseismic, nano-scale reservoir analysis, advanced
fracturing fluids, geosteering and more have simply made producers better and more
efficient at what they do.
• The U.S. natural gas cost curve has been upended
It is now cheaper to develop “bad” reservoirs than the “good” reservoirs. Huge, prolific
and highly profitable unconventional plays are profitable at $4.50 or $5 per Mcf, whereas
conventional gas strategies require $6 or $7 per Mcf to be profitable.
• U.S. unconventional strategies will open up “bad rock” elsewhere
The technologies and techniques that have opened up U.S. resources will be exported
around the world, giving places like Russia and Saudi Arabia a chance to go beyond
their substantial conventional production. It will open up a tremendous amount of supply
to the world.
James Wallis joined the Lime Rock Partners team in 2007 and is presently a
Vice President in the Houston office. Since joining Lime Rock partners, he
has primarily focused on EP and energy service opportunities in the oil
and gas sectors of North and South America. James currently serves on the
board of directors of Artificial Lift Company, Braden Exploration II, Endurance Resources and PDC Mountaineer. He is also particularly involved in
Lime Rock Partners’ investments in Augustus Energy Partners, Vantage
Energy, and Xtreme Drilling and Coil Services. He holds a BBA from the
Business Honors Program at the University of Texas.
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Expert insight
Private Equity Investing

9. By BoyarMiller’s Bill Boyar and GulfStar Group’s Cliff Atherton
With the ink on the 2012 election returns now dry, many people are questioning what
will be the impact of President Barack Obama’s reelection and unchanged control of
the Senate and House of Representatives on the energy industry capital markets. What
lies ahead in the public capital markets for private equity and MA? What can we expect
from the providers of senior and mezzanine debt?
Public Capital Markets
The public capital markets have not been favorable for the large-cap diversified energy
companies, and with the continuation of current policies, there is not much reason for
optimism. A trend that can be expected to continue is limited availability of capital in
the public market for energy companies other than midstream MLPs.
Private Equity
The substantial overhang of uninvested private equity commitments has driven substantial
private equity activity and will likely continue to do so. It appears as though 2013 will
continue to be an attractive time to sell or recapitalize middle market companies by
accessing private equity.
MA
Falling rig count, slight decline in oil prices and continued softness in natural gas prices
are causing a slowdown in EP activity. The recent surge of drilling activity in areas where
there is no transportation infrastructure has redirected investment activity to midstream –
in fact, 55% of all MA deals in second quarter last year were midstream deals.
Senior and Mezzanine Debt
The availability of senior and mezzanine debt continues to be the key driver of overall
transaction activity, and is particularly crucial for valuations in middle-market deals.
Senior lenders are managing regulatory pressure and tight credit requirements.
In conclusion, while public markets are likely to be weak, private equity firms will continue
to look for companies and management teams to support. The MA markets can be
expected to be strong, and debt markets will remain open but be characterized by
conservative underwriting and regulatory pressure.
For more detailed information about the state of capital markets,
read the full article.
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Expert insight
Current State of the Capital Markets

10. Energy
Practice Leaders
Chris Hanslik
Firm Chairman
Represents companies in all aspects of the energy sector, both
domestically and internationally, in disputes ranging from breach
of contract and fraud to misappropriation of trade secrets and
employment related disputes. Has secured favorable results in
both state and federal courts, as well as international arbitration
proceedings for energy clients.
Gary Miller
Chairman, Business Group
Represents numerous domestic and offshore-based companies
in connection with acquisitions and divestitures, financings, joint
ventures and general corporate matters in the United States.
Bill Boyar
Shareholder, Business Group
Represents the various parties involved in the acquisition, disposition,
capitalization and financing of national and international businesses. Served as lead counsel for numerous complex, multi-party
acquisitions and project financings with significant experience in
corporate finance, mergers and acquisitions, private equity and
structured finance.
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11. Represents multiple international energy and energy services clients with outbound expansion (i.e., U.S. companies expanding
internationally) and inbound expansion (international companies
expanding to the U.S.), including start up expansion or expansion
by acquisition, as well as in connection with financing and merger
and divestiture transactions.
Gus Bourgeois
Shareholder, Business Group
Represents clients doing business domestically and internationally
in connection with mergers and acquisitions, customer and vendor
contracts - including master services agreements - technology
licensing, employment agreements and related matters.
Craig Dillard
Shareholder, Litigation Group
Handles litigation in both state and federal courts, as well as on
appeal, for both domestic and international oil and gas clients who
have been sued in the United States or in arbitration. Specializes
in litigation of commercial contracts, including indemnity obligations; technology protection, including trademark infringement
claims, trade secret misappropriation claims and intellectual
property disputes; and, enforcement of oil and gas companies’
non-compete, confidentiality and other employment agreements.
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prac tice Leaders
Steve Kesten
Shareholder, Business Group

12. BoyarMiller
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boyarmiller.com
Our lawyers, both corporate and litigation, have a thorough
knowledge of providing services for both domestic and
international companies in the energy industry.
Continuous advice to multinational energy companies including
advisory work, transactions, mergers and acquisitions, employment
matters and litigation.
Extensive experience with negotiations, disputes and advice on a
variety of offshore and oil field services contracts – master service
agreements, terms conditions, framework agreements, etc.
Experience working with contracts developed by (or for) major
contracting companies.