Executive Summary Transaction Volume Shrinks Only 31 transactions were reported in Q2 2020, bringing the total reported transactions in 2020 to 113. Size Premium Size became an even greater pricing consideration for the middle market as transaction multiple variances widened for acquisition targets above and below $50 million. Debt Usage Decline In Q2 2020, total…

Executive Summary Issue It takes time and money to go through a Chapter 11 restructuring, so going through it twice in a couple of years is unwise and inefficient.  Recently, it has been an issue with companies operating in the energy complex.  The challenges and complexities of energy markets make reorganization plans hard to properly…

Executive Summary Issue There are three primary drivers that must be considered when looking at oil and gas prices.  First, they are commodities, and move with the complex economics of global supply and demand.  Second, they are very volatile.  And third, they can be significantly influenced by global, geopolitical factors. Challenge The challenge for anyone…

Following are excerpts of some of the key energy “themes” for the US in 2020, taken from a recent CreditSuisse energy research report [1]: E&P companies are evolving from growth-oriented to more capital disciplined and free cash flow generating entities; [2] Utilities will continue to transform into a lower-carbon and higher tech industry as renewable…

The oil price crash of 2015 and 2016 naturally led to numerous financial difficulties for many oil companies.  Following a partial rebounding of prices, oil companies rushed to produce by borrowing significantly.  This has led to a “debt wall” with scheduled maturities rising sharply over the next few years.[1] Many companies will have difficulty paying…

Investors and operators are now required to consider a portfolio of aging wells that have been drilled, but uncompleted (“DUCs”).  Delaying a completion of a previously drilled well, by as many as four years, has “little effect” on the initial production level, according to a new study by US Energy Information Administration (EIA). The study…

Remember that Little Bombing Incident in Saudi Arabia? Last month, two of Saudi Aramco’s oil production plants were attacked with a combination of twenty-five drones and missiles.  The sites hit, the Abqaiq and Khurais oil facilities, impacted Saudi production by 5.7 million barrels per day of crude [1]. This disruption in supply caused Brent Crude…

Was Natural Gas the Fuel for Jerry Jones’ $90 Million Bet on Zeke?   This last month, Jerry Jones, owner of Comstock Resources and the Dallas Cowboys, entered into a six-year, $90 million contract with running back Ezekiel Elliott, financed in part by natural gas.1  Jerry Jones was quoted as saying that, “the way you…

A Review of the Risk Premium Method for Regulated Electric Utility ROEs Energy ROE In utility financial economics, the cost of capital, or rate of return, is the cost of an electric utility’s invested funds, both debt and equity. The cost of equity capital is the rate of return that common shareholders require on their…

Natural Gas Producers Woes Continue Two natural gas-focused E&P companies are now down approximately 95% over the last five years. Driven by the over-supply from Permian Basin development (focused on oil, where natural gas is merely a byproduct). 5-Year Stock Performance: CHK (Dark Blue) and RRC (Light Blue) More recently, over the last 3 months,…

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