Tony Bennett may have left his heart in San Francisco, but it’s only because the honey-voiced crooner was not in the oil and gas business — especially natural gas.
Bennett was nowhere to be found at the Independent Petroleum Association of America ’s annual west coast Oil and Gas Symposium (OGIS) in late September. Sadly, neither was his heart. The San Francisco event this year attracted a less enthusiastic crowd reflecting a financial industry that, judging from the long third quarter drum roll of sell-side downgrades for oil services, had developed ennui on energy.
And that’s too bad. In contrast to today’s mega-conferences that emphasize large public companies rehashing progress in the latest tight formation oil or gas play, the west coast OGIS event is a forum for smaller public companies that are promoting tomorrow’s stories. It is an early glimpse at the conveyor belt of ideas imparting vitality to an evolving oil and gas industry.
San Francisco OGIS this year also featured one of the larger gatherings of upstream MLPs assembled in a single setting. The consistent yield model of the upstream MLP has come of age with investors. OGIS presenters included eight —count them — of the 11 existing upstream MLPs. If you want to know what’s going on in transactions, ask the management team of an upstream MLP. Each of the OGIS eight outlined a favorable climate for acquisition of mature assets.
“Assets change hands all the time,” Richard Robert, chief financial officer for Vanguard Natural Resources LLC . (NYSE: VNR) told attendees. “The type of assets C Corps divest are exactly what we’re looking for, so deal flow is not a problem.”
My Love Waits There In San Francisco
Actually the Permian Basin demonstrated some heart in San Francisco. The dusty West Texas region has returned to the prominence it once held when it was producing 25% of the nation’s daily oil production. A recent series of billion dollar transactions, some involving majors such as Chevron Corp . (NYSE: CVX) and Royal Dutch Shell Plc ’s (NYSE:RDS) September 2012 purchase of Chesapeake Energy Corp. (NYSE: CHK) Delaware Basin properties, demonstrate that operators are back in the saddle in a region that has produced oil or gas for more than 90 years. The Permian is gaining momentum as operators apply unconventional techniques such as horizontal drilling and multistage fracturing to multiple tight formation targets. That in turn