New analysis in Evaluate Energy’s M&A Review for Q1 2016 shows that privately held companies had a huge impact on the United States’ upstream oil and gas industry in recent months.
As the prospect of further exploration and production company bankruptcies looms, it is important to understand how to adequately protect security interests and the nature of competing liens that could prevent companies from fully realizing on the value of the collateral securing their counterparty’s obligations.
Do not underestimate the importance of the MLP's partnership agreement. It defines how income, losses, etc. are allocated among its owners. For example, the partnership agreement may include special allocations of certain types of income to certain groups of partners and not to other partners. Although this is not something an investor should count on to avoid an allocation of income that "is not fair to them," it could happen.
Avoiding a “Plan B” discussion until it is the only remaining option could eliminate a well-planned restructuring as a viable alternative. Being prepared with a real back-up plan involves foresight, time, and expense. Taking the initiative early is often critical for officers and directors – and the enterprise – in the long run.
As operators and investors continuously seek to find a “middle ground” where they can transact, many financial investors are starting to offer drilling partnerships that attempt to bridge the financing gap, instead of forcing acreage owners to sell their assets outright.
A recent survey quizzed Americans about their oil and gas knowledge. The survey was conducted by Aries Residence Suites, a company that specializes in housing to those connected with the oil industry in North Dakota and Texas.
The biggest gains on hedging in Q4 were clearly made by oil producers rather than gas producers; with the exception of Enerplus, all of these companies’ production portfolios are made up of over 75% oil.
During these tough times, it is easy to be hasty and to make mistakes. While we all have our theories and opinions, we don’t know when and where the bottom of this fall will be. Uncertainty is very difficult and can be unnerving. It is important to know what to do and what not to do.
Sure enough, February saw a rally in oil prices, and in the case of Brent greater stability around $60 a barrel. Since then we have seen restocking by many petrochemical buyers responding to both the rise in crude oil and its newfound stability.
Research revokes theory that net gains and losses in acreage will even out.
Low-leveraged companies with attractive cost structures are likely to survive.
CanOils expects this situation to rectify itself before too long, but for now it seems that all oil and gas companies are suffering, regardless of their individual production portfolios.