Energy & Industrial Sector Observations

Transcription

1 Energy & Industrial Sector Observations Oil and Gas Investment Hits 10-Year High. Investment in U.S. oil and gas production reached the highest level in at least a decade, according to the accounting firm Ernst & Young. A study released found that in 2012 the 50 largest U.S. oil and gas companies spent $185.6 billion on exploration and developing new production domestically. The increased exploration and development spending we re seeing in this year s study speaks to the incredible opportunity unfolding and the high cost of developing these unconventional resources, said Marcela Donadio, Americas oil & gas leader for Ernst & Young. Everyone wants in, and they are paying a premium to play. In the long term, analysts and industry leaders remain bullish. (Dallas Morning News June 4, 2013) Waterway Tower 433 E. Las Colinas Blvd. Suite 1200 Irving, Texas WS-iBank.com Texas Oil Output Surges, Growth Outpacing North Dakota. Crude oil production in Texas has jumped by a third in just 12 months, with booming output driven by the Eagle Ford shale and Permian Basin now outpacing growth in North Dakota. Oil output in Texas hit 2.45 million bpd in April, the E.I.A. said, an increase of more than 33 percent in the past year, or more than 600,000 bpd. (Reuters June 27, 2013) The Developing Shift in Natural Gas Market. Now that the Department of Energy is beginning to approve LNG export permits, with an additional 20 applications pending, North American producers have major incentive to drill. Sam Wahab, an Analyst at Cantor Fitzgerald, believes that if the U.S. becomes a major exporter of LNG, there will be good opportunities for companies with expertise to make strategic acquisitions. The disparity in gas prices between the U.S. and other international areas offers an incredible incentive for energy companies to put their gas on a ship and send it abroad. (Energy Report June 27, 2013) Broader Middle Market M&A Trends 6,000 5,000 4,000 3,000 Historical M&A Volume (Completed Deals < $500 Million) 10 Year Avg. = 3, x 8.0x 6.0x Transaction Valuations (Enterprise EBITDA; Completed Deals<$500 Million) 9.4x 9.2x 8.4x 8.4x 8.5x 7.9x 7.1x 7.0x 7.1x 7.4x 7.4x 8.1x 2, x 1, x LTM 0.0x LTM

2 PMI 2 Energy Stock Price Performance U.S. Rig Count 2,250 2,000 1,750 1,500 1,250 1, Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan % 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Oil Gas % Oil (As of June 28, 2013) Red New York Stock Exchange Composite Blue Oilfield Services Index Green Exploration & Production Basin Rig Count YoY Rig Change % Change Permian % Eagle Ford % Williston % Industrial Stock Price Performance U.S. Industrial Manufacturing (ISM) Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 (As of July 1,2013) Red New York Stock Exchange Composite Blue Industrial and Infrastructure Apr-13 May-13 Jun-13 PMI

3 3 Notable Energy & Industrial Transactions Announcement Date Acquiror Target Target/Transaction Description Energy & Industrial Manufacturing and Services 6/24/13 Aegion Brinderson, LP Integrated service provider of maintenance, construction, engineering and turnaround activities for the upstream and downstream markets Transaction Value ($M) $ /20/13 Entrec GT s Crane & Transportation Services, Inc. Acquisition of heavy lifting and transportation company with assets consisting of crane fleets, all-terrain trucks, multi-wheel trailers and tractors $57.0 6/19/13 Schlumberger, Ltd. Gushor, Inc. Petroleum geochemistry and fluid analysis company providing E&P solutions in the heavy oil and oil sand industry 6/19/13 DrillingInfo, Inc. Transform Software & Services, Inc. Colorado-based provider of an analytics-based approach for visualizing, modeling, interpreting and quantifying oil and gas reservoirs 6/19/13 Odyssey Investment Partners, 6/19/13 Argosy Private Equity/Akoya Capital Partners Cross-Country Pipeline Supply Co. Panhandle Oilfield Services Co., Inc. Colorado-based provider of pipeline equipment, supplies and services to the oil and gas pipeline construction sector Kansas-based provider of roustabout services, maintenance, equipment sales, trucking and other key drilling and production services 6/19/13 Intervale Capital Antelope Oil Tool & Manufacturing Co. 6/18/13 Emcor Group, Inc. Repcon Strickland, Inc. 6/18/13 MRC Global Flow Control Products 6/17/13 Atwell Peak Power Engineering 6/11/13 Savage, Co. Ft. Worth Pipe Services, LP Texas-based manufacturer of oilfield casing and cementing products, including centralizers and stop collars, for onshore and deep water applications Texas-based provider of services to oil refineries including product turnarounds, specialty maintenance, industrial construction, welding and refractory services Texas-based provider of pneumatic, electric and electrohydraulic valve automation packages and related field support to the Permian Basin Acquisition of UniversalPegasus Peak Power Engineering division that provides electrical and power engineering solutions Texas-based provider of line pipe storage, trucking and cleaning services to the Permian Basin, Barnett Shale and Marcellus Shale $ /6/13 HIG Capital Holland Services Texas-based provider of land advisory services, specifically GIS/mapping, asset management and asset marketing 6/6/13 Accelerated Companies/White Deer Energy Texas Systems & Controls Texas-based manufacturer and fabricator of vessels & process equipment that owns a 150,000 sq. ft. manufacturing facility $49.5 6/5/13 Forum Energy Technologies, Inc./Quantum Energy Partners Global Tubing Texas-based manufacturer of coiled tubing strings wherein each of the new purchasers owning half of the company

4 4 Notable Exploration & Production Transactions Announcement Date Acquiror Target Target/Transaction Description 6/28/13 Eclipse Resources Oxford Oil Company, Exploration and Production Purchase of assets located in Ohio that consist of 184,000 net acres and 13.8 Bcfe of proved developed producing reserves Transaction Value ($M) 6/28/13 Resolute Energy Halcon Resources Purchase of assets that include 22,900 net acres located in the Bakken $75.0 6/25/13 BreitBurn Energy 6/25/13 Southwestern Energy Co. Whiting Oil and Gas, Chesapeake Energy 6/25/13 Undisclosed buyer Samson Oil & Gas, Ltd. 6/24/13 Crestwood Midstream Partners, LP RKI Exploration & Production, Purchase of interests in oil fields and midstream assets located in Oklahoma $860.0 Purchase of assets in the Marcellus that include 162,000 net acres $93.0 Sale of assets located in Montana that consist of interests in 30,000 net acres $13.5 Acquisition of a 50% interest in Jackalope Gas Gathering Services,, which is a gathering and processing system located in Wyoming $ /24/13 Summit Midstream MarkWest Energy Acquisition of assets located in the Marcellus consisting of 40 miles of natural gas gathering pipelines and two compressor stations with over 21,000 horsepower in each $ /24/13 Atlas Resources EP Energy Purchase of mature coalbed methane properties with 466 Bcfe proved reserves located in New Mexico and central Alabama $ /19/13 Crestwood Midstream Partners, LP Inergy Midstream, LP Merger which leverages Crestwood s extensive relationships and existing contracts with top shale producers and Inergy s relationships with ultimate endusers including LDCs, refiners, petrochemicals, marketers and producers $7, /19/13 Caerus Oil and Gas, PDC Energy, Inc Purchase of assets that include 85 Bcfe of proved developed producing reserves and were producing 40 MMcfe/d as of Q1 13 $ /17/13 Natural Resource Abraxas Petroleum Purchase of Anadarko Basin assets with proved reserves of 171 Bcfe, Q1 13 production of 57.7 MMcfe/d (94% gas) and 118,243 net acres $ /13/13 PetroTech Oil and Gas, Inc. 6/6/13 Wapiti Energy Holdings, Pangean Energy, Layline Petroleum, Purchase of rights in mineral interests located in the Bakken $28.8 Purchase of properties located in Texas that have proved reserves of 23.2 MMBoe $375.0

5 5 Wilcox Swartzwelder & Co. Wilcox Swartzwelder & Co., a boutique investment bank, delivers high quality financial advice exclusively to owners of oil and gas properties and middle market companies in the energy and industrial sector. Advisory services include mergers and acquisitions, company sales, oil and gas property acquisitions and divestitures, institutional capital raises, exploration and production financing 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 $3.8 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,, a registered broker-dealer and member of FINRA/SIPC. Notes: The information and views contained in this report were prepared by Wilcox Swartzwelder & Co. 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. 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.org, Baker Hughes, RigData, Rig Zone, Energy Information Agency (EIA), Association of Energy Service Companies (AESC), Institute of Supply Management (ISM), Wilcox Swartzwelder Proprietary Energy, Industrial & Infrastructure M&A Database Copyright 2013 Wilcox Swartzwelder & Co., all rights reserved.