Press Release
Energy Advisors Group Releases Focused Oil & Gas Perspectives Series
Initial studies on Eagle Ford Area, Delaware and Appalachian Basins
HOUSTON, September 12, 2023: As part of its ongoing research and thought leadership efforts, Energy Advisors Group (EAG) launches its Oil & Gas Basin Perspectives Series intended to provide industry participants with actionable intelligence regarding oil and gas resource plays. “These reports provide content, contrast, and context by incorporating analysis on M&A activity, E&P operations and capital market highlights,” said Ronyld W. Wise, Founder and Managing Partner of the firm.
Eagle Ford Perspectives – Surge in M&A Activity
Energy Advisors’ inaugural Eagle Ford Perspectives highlights factors driving a surge in Eagle Ford A&D activity to $11.7 billion for the 12 months ending June 30, 2023, the highest volume since the 12 months ending June 30, 2014. In just three months from November 2022 to February 2023, the play saw four billion-plus dollar deals with buyers including Marathon, Wildfire, INEOS and Baytex. These buyers all seek to establish or expand core areas with enough running room to maintain production levels for years to come. The play, which stretches along the Texas Gulf Coast, is attractive with ample existing infrastructure and proximity to both oil and LNG export markets. The play also includes all commodities from dry gas to oil and continues to evolve with the Austin Chalk renewal being the latest example of meaningful value creation.
Delaware Basin Perspectives – Industry’s Most Active Play
Next in the series is the Delaware Basin, a play that tracks from West Texas into Southeast New Mexico. The Delaware is currently the industry’s most active U.S. resource play and witnessed increased A&D activity such as the $7.1 billion in 1H 2023 deals compared to $8.7 billion in all of 2022. Virtually all of this deal activity was triggered by small to mid-cap public companies on the buyside and the exit of private equity backed companies on the sellside. Energy Advisors expects competitive A&D pressures to remain strong in the Delaware as the universe of meaningful private and private equity backed companies shrinks to just 24 and 12, respectively. Recent buyers report well level breakeven economics as low as $40 per barrel. The area is home to a host of operating innovations including optimized co-development of multiple benches and a pilot project to drill a “horseshoe” lateral which, if successful, would save $5 million and up to 50% by drilling one two-mile lateral versus two one-mile laterals. In services, Atlas Energy Solutions is building the “first of its kind” 42-mile conveyor belt for sand delivery – an effort that will not only provide cost efficiencies but also reduce truck traffic and related fatalities.
Appalachian Basin – Industry’s Largest Natural Gas Play
Our most recent study is the Appalachian Basin Perspectives, a play that accounts for ~30% of U.S. natural gas production yet is currently hampered by pipeline takeaway capacity and lower natural gas prices. These factors caused an abrupt pause in A&D in 1H 2023 to just $125 million after a stellar $8.6 billion in deals in 2022 – the highest level of deal dollars since the record $10.4 billion in 2014. Despite the current short-term challenges, this basin’s long-term future is bright given the increasing importance of U.S. natural gas on a global scale. According to some industry sources, surges in U.S. Gulf Coast LNG takeaway capacity plus exports to Mexico may drive a projected 4.8 Bcf/d shortfall in supply by year-end 2025 and leave U.S. consumers in competition with offshore LNG buyers. Also supporting strong underlying demand outlook and despite headlines of natural gas storage being above the five-year average, the days of supply of natural gas storage is actually below trend driven by record demand for natural gas for electricity generation. On the E&P side, the top three operators (EQT, Chesapeake and Southwestern Energy) account for 37% of the basin’s output. EOG Resources is also active, having leased nearly 400,000 incremental acres in late 2022 as it focuses on expanding the Utica Combo play in Ohio westward. Regarding takeaway, the Mountain Valley Pipeline got the green light to complete construction of the 42-inch, 2 Bcf/d pipeline which is expected year-end 2023. Williams is also progressing on its Southeast Supply projects to increase capacity for natural gas flows from Appalachia to the Texas/Louisiana Gulf Coast.
Brian Lidsky, Director of Research at Energy Advisors, notes that additional reports are in the works including Oklahoma’s SCOOP and STACK play to be released in September along with a report on the Haynesville. “These reports are helpful for buyers, sellers and capital providers as they make decisions on portfolio rationalization” says Lidsky. The EAG team understands oil and gas dealmaking having been in the space for over 30 years under the PLS Inc. brand. Lidsky adds, ”Lessons learned, and insights gained studying E&P operations, M&A and capital markets have led us to identify improved methods to originate, manage and close transactions on behalf of industry clients.” To receive the EAG Oil & Gas Basin Perspective Series reports email Richard Martin at rmartin@energyadvisors.com.
About Energy Advisors Group
EAG is a leading provider of global oil and gas marketing and advisory services. The firm and its partners have worked on over 1,000 assignments and advised on over $100 billion in transactions for over 400 clients. More information can be found at: www.energyadvisors.com.
Contacts:
Brian Lidsky
Director of Research
(713) 600-0138
Cole Reynolds
Director, Geosciences & Market Research
(281) 809-6186