HOUSTON--(EON: Enhanced Online News)--A new market study from RBN Energy assesses the fast-paced, multibillion-dollar effort by the nation’s leading exploration and production companies (E&Ps) to reshape their portfolios and better position themselves for a new, even more competitive era in crude oil and natural gas production. E&Ps are adding to their holdings in a half-dozen top-notch shale and tight-oil plays, jettisoning assets in less-profitable areas, and striving like never before to optimize the efficiency of their drilling and production.
“What we are seeing today is quite different from the major industry consolidations that have followed other price downturns”
Despite predictions of widespread bankruptcies and credit defaults after the plunge in oil prices in late 2014, most of the upstream industry weathered the crisis remarkably well through high-grading of portfolios, impressive capital discipline, and an intense focus on operational efficiencies.
“What we are seeing today is quite different from the major industry consolidations that have followed other price downturns,” noted RBN President Rusty Braziel. “Much of this cycle has been characterized by transactions in which E&Ps are concentrating their assets, building out significant contiguous acreage positions in their core operating areas while generating funds for operations and acquisitions through equity offerings, debt refinancing and sales of non-core assets. The strongest and most aggressive of upstream companies have been behaving like schools of piranha, eating away at small pieces of other companies in hundreds of transactions that are simultaneously fragmenting and reconstituting the U.S. E&P sector.”
This revolutionary development begs a number of important questions: How will the newly transformed E&P sector perform? Where will E&Ps invest? Which companies will be successful and which will fall by the wayside? How will these companies impact world oil and gas markets?
To answer these and many more questions, RBN Energy has joined with Oil & Gas Financial Analytics to create a new market study titled Piranha! The “Piranhaization” of U.S. E&Ps. This study provides an in-depth analysis of the reconstituted E&P sector, and covers 43 U.S. E&Ps that are most representative of the U.S. upstream industry. Collectively, these companies produce about half of total U.S. oil and gas output, and have a total enterprise value of over $650 billion.
Piranha! is a 150-page assessment of today’s E&P industry trends, strategies, and individual company financial performance. Among various topics, the analysis examines U.S. upstream M&A activity and capital investment (CAPEX) spending plans by the 43 companies to determine how aggressive they are planning to be. The market study then presents a “Financial Strength Analysis,” which evaluates companies on two metrics: financial position and equity valuation.
The winners in this industry-wide transformation will be the companies that:
1. Adopt strategies to maximize investment returns by focusing on their core operating areas
2. Maintain strong balance sheets that will enable them to weather future commodity price downturns
3. Demonstrate the ability to execute through adoption of new technologies, effective operations, and prudent acreage acquisitions