Welcome to Mergermarket's Energy Forum
The oil and gas industry's recovery from the current commodities cycle has become defined by a price outlook that is stable but restricted on both a high and low end. Capital discipline is now the watchword and activism is on the rise. Although energy companies have spent USD 280bn on shale investments, institutional investors want to see a switch from growth mode to more profit-oriented strategies.
In such an environment, oil and gas companies are evaluating all their options. From share buybacks and paying dividends to divestitures and corporate mergers. Plentiful private capital is waiting in the wings, ready to invest in support of management teams or to take advantage of newly created opportunities, although these investors are also demanding discipline in a lower-for-longer commodity price environment.
Meanwhile, energy infrastructure and oilfield service businesses that support producers are seeking opportunities that take a relevant role in the new energy reality. Opportunities abound from new pipelines and infrastructure that will quench the thirst for natural gas and water, treatment and disposal for capital-conscious upstream companies and mapping out new intra-basin pipelines & gathering systems. Service providers have zeroed in on improving efficiency and cutting costs in their own work and for their clients.
Please join the Mergermarket staff and esteemed panelists cover these pressing issues and much more facing the energy industry.
Registration and Breakfast
E&P Industry Cycle Goes From Recovery to Profitability
Entering into the E&P picture during the industry's 2015/16 bankruptcy cycle as a distressed debt opportunity, hedge funds, now acting as company shareholders, are seizing the moment. Many are trying to convince upstream companies to sell assets or consider tie-ups to squeeze more value from their investments as the companies continue to underperform the S&P 500.
Delegates will have an opportunity to listen to panelists discuss the dynamics between firms divesting assets to those who are hungry buyers, shaping energy M&A for years.
- What plays are attracting capital from public companies? How does that impact deployment of private equity?
- How are companies adapting to the new investor demands for earnings? How much impact is shareholder activism having on corporate boards
- What do the public markets look like for IPO hopefuls?
- Where is the consensus on valuation? What is the outlook for corporate dealmaking?
Coffee Networking Break
Financing OFS Firms' Path to Specialization
Oilfield service providers continue to sharpen their areas of expertise in order to stand out from peers. One area of intense interest is water services. In fact, the interest is so strong that it has emboldened players such privately backed WaterBridge Resources to seek financing in the public markets. WaterBridge is positioning itself as an IPO candidate for 2018 and has the potential to be the first public pureplay midstream water MLP. Other opportunities within pressure pumping, well services, manufacturing, drilling and others are garnering lots of attention. However, the energy stock slump has impacted the oilfield service the most among energy firms, slowing the pace of public filings. Market observers believe those that have gone public will play role of consolidators, and those who haven't will have to sell or turn to private sources of capital.
Panelists will discuss the focus on water services among oilfield service companies, consolidation and opportunities ahead.
- Will industrial companies enter the oilfield service fray or will they spin off assets, à la Dover Corp.'s Wellsite?
- Assessing new entrants into the OFS subsector that focus on technology – A.I., drones, completion and downhole technologies, sensors, etc. What will be the acquisition opportunities?
- Aside from public equity markets, how are OFS firms financing their operations and acquisition opportunities?
- With frac sand use and costs on the rise, firms are becoming more involved in managing sand acquisition and logistics. Are management teams ready for those complexities?
The Impending Buildout of Energy Infrastructure
Midstream O&G is undergoing a transformation similar to OFS firms in the wake of the 2014-15 commodities downturn. Operators are refocusing their efforts on lucrative basins, such as the Permian, and corresponding assets like LNG facilities and water services. However, the public markets' faith in the pipeline business remains shaken, which has pushed owners and investors to pursue atypical funding mechanisms via crossed-wall offerings, preferred equity offerings and at-the-market programs. This financing will enable midstream operators to take advantage of the growing natural gas glut and corresponding opportunities related to much-needed infrastructure in the Gulf Coast and Mexico as higher oil and gas volumes move through pipelines.
Delegates will have an opportunity to listen to panelists discuss how the midstream is evolving in the current commodity cycle.
- What new energy infrastructure opportunities in the Gulf Coast and Mexico await investors? What are the risks for pipeline development in Mexico?
- What contract terms and structures should investors closely evaluate while analyzing pipeline opportunities? How have GPs' IDRs shaped MLP deal making recently?
- How are midstream owners financing operations and dropdown acquisitions in light of challenging public equity markets? What are the opportunities for direct lenders, private equity firms and infrastructure funds?
- What have been the Dakota Access Pipeline's effects on Bakken crude prices, market access and other takeaway pipelines and crude by rail?
- What are the prospects for LNG asset acquisitions in terms of storage, processing, export facilities and pipelines in the near future?
- Opportunities stemming from upstream companies whose access to capital is more constrained than it has been in the past & are looking to sell pipelines and midstream infrastructure.
Coffee Networking Break
Opportunistic Sponsors Look to Seal Deals
The more developed resources are set to become the playground of private equity firms. As small-cap companies look to become midcap through mergers, so will private equity firms hunt for platform assets to bolt onto existing portfolio companies. Since public markets have not helped many cash-strapped energy firms, private equity firms are all too happy to finance deals as a proud, new sponsor. However, what will separate successful management teams from the rest?
Panelists will discuss how buyout shops are shaping energy M&A.
- What value will successful PE management teams be able to add to O&G operations?
- How is competition between buyout shops and infrastructure funds shaping auctions and the overall deal environment?
- A close look at the debt stack in energy-related LBO transactions. Leverage levels and balance sheet concerns.
- What IRRs will private equity investors require of their energy investments and is it attainable over their holding periods?
* Agenda is preliminary and subject to change.