MERGERMARKET ENERGY FORUM

APRIL 20, 2017 | THE FOUR SEASONS, HOUSTON, TX

Welcome to Mergermarket's ninth annual Energy Forum.

At the recent USD 50 per barrel (bbl) range, oil has roughly doubled its 13-year low set earlier in 2016. Short run stability in market equilibrium is in large thanks to tightening production from US producers and OPEC members. Investors have become confident in high yield energy firms that have withstood default, but lacking sales growth, executives and activist shareholders will look to expand via M&A. One daunting byproduct of M&A activity is the increased risk of default as lower rated companies cash flows are burdened by higher leverage. Will the default rate increase as time goes on?

Oilfield service companies are now facing the prospect of industry consolidation and are beginning to defend market position by deepening their respective specialty services even further. With upstream production returning to profitability under the USD 40 - 50/bbl price environment and major cost cutting complete, firms will look to grow via M&A. While Wall Street has loosened the purse strings a bit, financing these acquisitions will require creativity as many oil & gas companies still remain on bankers' Do Not Call list. Here, private equity firms see an opportunity to cash in on certain post-bust survivors by providing acquisition and growth capital.

This year's Mergermarket Energy Forum will provide greater perspective on various subsectors, financing trends, and basin activity that weigh greatly on the minds of M&A teams.

Agenda

Registration and Breakfast

Morning Keynote

    Speaker
    John England, Vice Chairman, US Energy & Resources Leader, Deloitte LLP

Presentation: 2017 Canadian Oil & Gas Outlook


    Speakers
    Chris Christopher, Partner, Torys LLP
    Neville Jugnauth, Partner, Torys LLP

Energy Market Structure Under Prevailing Prices And Impact On Consolidation

OPEC cuts and a strong US Dollar along with other variables represent a confluence of up and down pressures on oil pricing, casting uncertainty around recoveries and dealmaking. If market equilibrium establishes a new price range in the short run, could long-run conditions set a trap for investors similar to Feb '16 when people thought a sustained recovery was in place?

Listen to panelists discuss the current market structure and how its fundamentals will impact energy sector dealmaking over the next 12 months.

  • Forecasting trajectory of Greenback as proxy to oil and gas price changes and market dynamics
  • Will there be further consolidation via M&A among "equals" or will larger companies swallow smaller ones in the Permian and Delaware acreage?
  • What impacts can the market expect in face of potential IPOs?
  • Considering growth in IPO filings for upstream companies. Will it continue?
  • Assessing rig count at USD 60 - 65/bbl in the Eagle Ford and will this set off a string of deals?
  • Examining outbound US opportunities in the evolving oil and gas markets of Canada and Mexico.

  • Speakers
    Juan Carlos Machorro, Partner, Santamarina y Steta
    Jacob Nagy, Partner, Petrie Partners
    Eric Swanson, Managing Director, GulfStar Group
    Hana Askren, Senior Reporter, Mergermarket (moderator)

Coffee Networking Break

Oilfield Service Companies Scramble To Differentiate Services And Capabilities

Much to the chagrin of distressed investors and M&A teams, the market for oilfield equipment and services in 2016 and 2015 remained flat compared to previous years. While large bid-ask spreads, price volatility, lack of acquisition capital, and doubts about timing all played a role M&A dealmakers may find their fortunes changing in due time. The sector landscape has been changing, with signs of readiness for corporate transaction activity. Energy executives are looking to deals as a means to achieve scale, fill in portfolios or enhance capabilities. We've already begun to see this type of activity at the end of 2016 when General Electric and Baker Hughes agreed to a USD 31.6bn merger with the former's oil & gas business.

Listen to panelists discuss how liquidity, asset strength and access to capital markets will affect OFS firms' M&A options.

  • What capabilities need to be obtained/improved to gain market share?
  • Operating leverage examination – is technology promoting a sustainable cost structure? In a post-cost cutting environment will certain costs sneak back into operations? Etc.
  • OFS firms that are chronic dealmakers tend to realize 30 – 40% more value than those who make one-off acquisitions. Who are they and how to engage them?
  • Analyzing supply elasticity and impact on OFS service pricing.
  • Assessing activity in the Bakken, Eagle Ford, Marcellus, and Cotton Valley.
  • Will the trend of joint ventures and upstream services becoming bundled across the E&P value chain continue? How will it impact dealmaking?

  • Speakers
    David B. Andrews, Senior Managing Director, Evercore
    Daniel Dorney, Director- Corporate Development, Halliburton
    Rodney Reed, Vice President Corporate Development, National Oilwell Varco
    Chad Watt, Energy Sector Head – North America, Mergermarket & Dealreporter (moderator)

Lunch

M&A Moving Midstream Forward

Large-cap oil firms have completed adjusting to the post-bust market by cutting back on high cost exploration projects and finding more efficient ways to operate. For the most part, bankruptcies and restructurings are beginning to show up in the rear view mirror. However, with constricted sales growth, companies will seek to expand and gain synergies through mergers. Historically, of that flow, the bulk of action came in the midstream space, where USD 59.76bn worth of deals were announced. This could not be more obvious than with Sunoco Logistics Partners acquiring mid-stream firm Energy Transfer Partners in the largest deal of 4Q16 for USD 51.4bn.

Listen to panelists discuss the ongoing consolidation throughout the midstream space over the next 12 months.

  • Sizing up consolidation trends among the remaining 100 or so existing MLPs.
  • Reviewing MLP's latest acquisition efforts of assets in the Midland and Delaware sub-basins.
  • Examining how oil & gas automation and analytics are driving M&A.
  • How will public policy changes impact midstream M&A?

  • Speakers
    David C. Buck, Partner, Andrews Kurth Kenyon LLP
    Michael J. Casey, Managing Director- Global Energy Group, Citi
    Louis J. Dorey, Senior Vice President of Corporate Business Development, American Midstream Partners
    Mark Druskoff, Deputy Editor, Natural Resources - North America, Mergermarket & DealReporter
    Brad Wright, Director, M&A and Strategic Planning, Plains All American Pipeline LP
    Brian Frick, Sales Director, Venue Deal Solutions, Donnelley Financial Solutions (moderator)

Coffee Networking Break

Energy Private Equity Firms Hold The Keys To Unlocking M&A

While bankers may have black listed lower credit quality O&G companies and investors have shied away from exchanging into equity, upstream companies are wasting no time in trying to unlock other doors to capital. Private equity firms, holding around USD 175bn in committed capital for energy investments, may hold such keys. Financial sponsors have been the capital of choice because of its flexibility and expertise in energy. Even some of the cost of private equity capital has decreased of late. However, some of the challenges private equity players will confront are competition from strategic buyers and other "alternative" capital providers.

Listen to panelists discuss private equity's most recent role in fostering M&A activity throughout the oil and gas sector.

  • Discussing the trends in reduction of hurdle rates, paybacks, and other sweeteners for sellers.
  • Exploring private equity activity: identifying what basins, type of upstream/OFS targets, and are recent acquisitions being "bolted on" to current portfolio companies or kept independent?
  • What acquisition strategies and activities are private equity backed O&G companies conducting?
  • Assessing what operational value are private equity firms are bringing to the table.
  • What assets are generating competition between private equity firms and strategic buyers?
  • Examining if private equity, with higher cost of equity, compete with corporates' unlimited currency in equity to finance acquisitions?

  • Speakers
    William R. Brown, Director, First Reserve
    Mark Burroughs, Managing Director, EnCap Investments, LP
    Margaret Franks, Principal, The Carlyle Group
    Jerry Schretter, Managing Director- Global Energy Group, Citi
    Ray Ballotta, Advisory Partner, Deloitte & Touche LLP (moderator)

Cocktail Reception

Contact Us

Get in touch with us to find out about speaking opportunities or registration.

Lead Strategic Partner

Strategic Partners

Panel Sponsor

Venue


Four Seasons Hotel Houston

1300 Lamar St
Houston, TX, 77010