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M&a trends for the energy industry october 2014

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View the latest merger & acquisition trends in the energy sector. WS360 is brought to you buy Wilcox, Swartzwelder & Co., a leading boutique energy investment bank in the United States with a focus on middle market oil & gas companies.

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M&a trends for the energy industry october 2014

  1. 1. Sector Update | October 2014 phone 972.831.1300 | web WS-iBank.com - 1,000 2,000 3,000 4,000 5,000 6,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM Historical M&A Volume (Completed Deals < $500 Million) 10 Year Avg. = 3,709 7.9x 9.4x 8.4x 9.2x 8.4x 7.1x 7.4x 8.5x 7.4x 8.2x 8.2x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM Transaction Valuations (EBITDA Multiple; Completed Deals<$500 Million) Energy & Industrial Sector Observations  Tight Oil Plays Accelerating M&A Activity. Merger and acquisition activity accelerated in the first half of this year from a year ago, dominated by onshore tight oil transactions. M&A activity in North America totaled $67 billion for the first six months of 2014, versus $55 billion in the first half of 2013. According to analysts at BMO Capital, “this suggests a fairly robust investment undercurrent. We believe recent consolidation trends are indicative of the robust health of the oil and gas industry and [we] expect additional, albeit more measured, M&A activity to continue in select regions through 2015." (NGI’s Shale Daily – September 16, 2014)  American Petroleum Institute: Energy Boom Fueled by Small Businesses. When it comes to the U.S. energy boom, small and mid-size firms -- not Big Oil -- are providing the momentum for growth, according to an American Petroleum Institute report. The industry group's report looks at the oil and gas supply chain in all 50 states, listing more than 30,000 firms across the country. The findings were based on a nationwide survey asking oil and gas companies what suppliers, contractors and other vendors they use. Louisiana has 1,711 vendors supporting the oil and gas industry. The API report estimates those firms contribute $73.9 billion to the state's economy. Texas topped the list with more than 11,000 vendors followed by Oklahoma at 2,513 and California at 1,980. (The Times-Picayune – September 9, 2014)  U.S. Crude Output Forecast to Hit 45-Year High. U.S. crude production will surge to a 45-year high next year, lowering prices and reducing the need for imports, government forecasters said yesterday. The U.S. Energy Information Administration raised its estimate of 2015 output by 250,000 barrels a day to 9.53 million, the most since 1970. (Bloomberg – September 10, 2014) 102 Decker Court Suite 204 Irving, Texas 75062 972.831.1300 WS-iBank.com Broader Middle Market M&A Trends
  2. 2. 2 Sector Update | October 2014 phone 972.831.1300 | web WS-iBank.com Energy Stock Price Performance Red – New York Stock Exchange Composite Blue – Oilfield Services Index Green – Exploration & Production U.S. Rig Count (As of September 26, 2014) Industrial Stock Price Performance Red – New York Stock Exchange Composite Blue – Industrial and Infrastructure U.S. Industrial Manufacturing (ISM) (As of October 1, 2014) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14 Oil Gas % Oil 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14 PMI Basin Rig Count YoY Rig Change % Change Permian 556 103 23% Eagle Ford 210 -17 -7% Williston 198 15 8% Jul-14 Aug-14 Sep-14 PMI 57.1 59.0 56.6
  3. 3. 3 Sector Update | October 2014 phone 972.831.1300 | web WS-iBank.com Notable Energy & Industrial Transactions Announce- ment Date Acquiror Target Target/Transaction Description Transaction Value ($M) Energy & Industrial Manufacturing and Services 9/25/14 Solaris Oilfield Infrastructure/ Solaris Energy Capital Loadcraft Site Services Acquisition of the right to be the exclusive distributor of Mobile Silo Systems and a manufacturing facility in Early, TX used to manufacture mobile frac units and trailers -- 9/24/14 Maxim Partners Integrity Directional Services Recapitalization of Texas-based provider of directional drilling services to the Bakken, Permian, Haynesville, Barnett and Rockies -- 9/23/14 CSL Capital Management Torrent Energy Services Texas-based operator of modular gas processing equipment (compressors, generators and mechanical refrigeration units) that recovers NGLs and reduces flares -- 9/22/14 Siemens Dresser-Rand Provider, through 8,000+ employees, of gas & steam turbines, engines and compressors to the oil & gas, process and power industries $7,600.0 9/17/14 Basic Energy Services Pioneer Fishing and Rental Services Provider of fishing and rental tools with offices in Oklahoma and Texas that serve the Texas Panhandle and North Barnett Shale $16.0 9/12/14 Empeiria Capital Partners JL Bryan Equipment & Lease Services Manufacturer for the Mid-Continent of storage tanks and pressure vessels used to separate and store oil and water at the well head -- 9/12/14 Empeiria Capital Partners Tank Partners Manufacturer for the Permian and Eagle Ford of steel storage tanks and pressure vessels used to separate and store oil and water at the well head -- 9/12/14 Acteon Group/KKR/ White Deer Energy UTEC Survey/ Lime Rock Partners International conglomerate that provides surveying services to the offshore industry -- 9/9/14 Beckman Production Services Big Lake Services/ Rock Hill Capital Provider of coil tubing, completion, workover and P&A services through its 850 employees, 135 well servicing rigs, 9 coil tubing units & ancillary rental equipment -- 9/8/14 Ridgemont Equity Partners Abrasive Products & Equipment Distributor, with 14 locations throughout the Gulf Coast and Mid-Atlantic regions, of specialty abrasive materials & equipment, maintenance & environmental supplies -- 9/8/14 Extreme Plastics Plus /Hastings Equity Partners American Well Service Pennsylvania-based provider of containment and closed loop drilling solids control services -- 9/4/14 US Shale Solutions Ritter Construction/ Cuberson Construction/ J4 Fluid Services/ W. Pidhimey Welding With 2,700+ personnel, the companies provide infrastructure construction, welding fabrication services, completion & drilling fluids pumping services and other field services -- 9/3/14 Teledyne Bolt Technology Corp. Supplier of marine seismic energy sources, synchronization electronic controllers, underwater cables & connectors, monitoring systems & mini-ROVs $171.0
  4. 4. 4 Sector Update | October 2014 phone 972.831.1300 | web WS-iBank.com Notable Exploration & Production and Midstream/Downstream Transactions Announce- ment Date Acquiror Target Target/Transaction Description Transaction Value ($M) Exploration & Production and Midstream/Downstream 9/29/14 Encana Corp. Athlon Energy Inc. Acquisition of assets that include 140,000 acres located in Midland Basin with 5,000 potential horizontal well locations and 3 billion boe of reserve potential $7,100.0 9/29/14 Pioneer Natural Resources Undisclosed seller Acquisition of assets with production of 10,300 boep/d located in the Barnett Shale $155.0 9/26/14 Bravo Natural Resources, LLC Canaan Natural Gas PE Funds Acquisition of assets located in the Arkoma Basin that include 950 operating and non-op wells with proved reserves of 268 BCFE and production of 33 MMcfe/d $250.0 9/25/14 Atlas Resource Partners, LP Undisclosed seller Acquisition of assets located in the Eagle Ford that consist of 22 producing wells with 19 undeveloped locations and 12 Mmboe of proved reserves $225.0 9/23/14 Undisclosed buyer Newfield Exploration Co. Sale of natural gas assets located in the Granite Wash with production estimates from 2014-2016 of 4 MMBoe, 3.1 MMBoe and 2.7 MMBoe, respectively $588.0 9/19/14 Juneau Energy, LLC Undisclosed seller Acquisition of assets located in the Eagle Ford consisting of 10,200 acres -- 9/19/14 Exxon Mobil Corp. LINN Energy, LLC Non-monetary exchange where Exxon receives 17,800 acres located in the Permian Basin and LINN receives 500 acres located in California -- 9/17/14 Vitesse Energy, LLC EnerVest Operating, LLC Acquisition of assets located in the Williston Basin with working interest in over 600 wells and 19,000 acres $186.5 9/12/14 LINN Energy, LLC Pioneer Natural Resources, Co. Acquisition of assets located in Kansas that include wells, acreage and an interest in a gas processing plant $340.0 9/4/14 LRR Energy, LP Undisclosed seller Acquisition of assets located in Oklahoma consisting of acreage and a Stroud Prue Sand Unit, one of the largest Prue Sand waterfloods $38.0 9/4/14 Callon Petroleum Co. Undisclosed seller Acquisition of undeveloped acreage and producing properties located in the Permian Basin $213.0
  5. 5. 5 Sector Update | October 2014 phone 972.831.1300 | web WS-iBank.com Wilcox | Swartzwelder & Co. Wilcox Swartzwelder & Co. is a boutique investment bank, specialized in delivering high quality financial advice exclusively to owners of middle market companies and oil and gas properties in the energy and industrial sector. Advisory services include company sales, mergers and acquisitions, private placements of debt and equity, oil and gas property acquisitions and divestitures, institutional capital raises, and general corporate finance matters. Through its merchant funding activities, the Firm acts as direct investor providing flexible capital to support small, entrepreneurial companies. Principals have more than 40 years of combined investment banking experience, closing over 100 transactions with an aggregate value in excess of $3.9 billion. They have also acted as investors with capital at risk, operators and board members in multiple companies, having navigated through various business cycles and completed transactions in both up and down markets. The Firm is fully licensed and registered. Securities are offered through PetroGrowth Energy Advisors, LLC, a registered broker-dealer and member of FINRA/SIPC. Notes: The information and views contained in this report were prepared by Wilcox Swartzwelder & Co. LLC and should not be construed as an offer to buy or sell or a solicitation to buy or sell any financial instruments or to participate in any trading strategy. The information contained herein is believed to be reliable, but Wilcox Swartzwelder & Co. LLC makes no representation as to its accuracy or completeness. Indices: Dow Jones U.S. Select Oil Equipment and Services Index (DJSOES), Dow Jones U.S. Select Oil Exploration and Production (DJSOEP), Industrial Select Sector SPDR (XLI), NYSE Composite Index (NYA) Data Sources: Dealogic, Capital IQ, Stockcharts.com, Baker Hughes, RigData, Rig Zone, Energy Information Agency (EIA), Association of Energy Service Companies (AESC), Institute of Supply Management (ISM), Wilcox Swartzwelder Proprietary Energy and Industrial M&A Database Copyright © 2014 Wilcox Swartzwelder & Co. LLC, all rights reserved.