oil & gas report q2 2016€¦ · oil & gas report q2 2016 explore m&a activity, capital...

720.221.9220 | SDRVENTURES.COMInvestment Banking & Securities Offered Through SDR Capital Markets, Inc., Member FINRA & SIPC.

OIL & GAS REPORT

Q2 2016

Explore M&A Activity, Capital Market Conditions and Current Trends for the

Oil & Gas Industry

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720.221.9220 | SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets, Inc., Member FINRA and SIPC.

OIL & GAS REPORTQ2 2016 | VOL 4 | ISSUE 2

Q2 INDUSTRY UPDATEPetroleum Product Exports at an All-Time High

KEY TRENDSEven in the peak summer driving season with gasoline demand hitting all-timehighs, U.S. refineries are still cranking out products. Gasoline stocks are up10% from a year ago—15 million barrels (MMbbl) which is higher than the topof the five-year range—and just weeks ago, gasoline inventories made acontra-seasonal move upward, increasing by 1.4 MMbbl. Net exports for thefirst quarter were up almost five times over the same period in 2015.

Gasoline consumption this summer was projected to average 9.5 MMb/d, asolid 1.9% higher than the summer of 2015, which was a strong demandseason itself. Even with high domestic demand for gasoline, net U.S. exportvolumes remain impressive.

The graph below shows U.S. Energy Information Administration (EIA) netexports of gasoline (exports less imports of gasoline) and net exportsof distillates (exports less imports of distillate fuel oil and jet fuel).

The graph on the left is the total of net gasoline and distillate exports, showingthe huge shift of the U.S. from a net importer of about 1.5 MMb/d in 2006 to anet exporter of about 1.2 MMb/d over the past six months.

The graph on the right focuses on the 2012-2016 timeframe and splits netexports into gasoline (green line on chart below) and distillates (brown). Bothare still trending higher, but the big news is gasoline, which has moved wellinto the net export category since late 2015 (dotted purple oval).

REFINING AND MARKETING PUBLIC BASKET ANALYSIS

2

The information contained herein is based on sources we believe reliable but is not guaranteed by us and is not to be considered all-inclusive. It is notto be construed as an offer or consultation of an offer to sell or buy any securities.

Established in 2002, SDR Ventures hasdeveloped deep M&A and capitaltransaction knowledge and expertise.SDR offers transaction advisory, privatecapital formation and businessconsulting services across a wide rangeof industries. We serve business ownersand operators of privately heldcompanies and provide them with aprofessional-class experience.

ABOUT SDR

Transaction ActivityActive BuyersPublic BasketM&A Market ActivityAbout SDR Ventures

OIL & GAS CONTACTS

CONTENTS

Chris BouckPrincipal – Oil & Gas [email protected]

Steve CrowerDirector – Oil & Gas [email protected]

Market Value (Mil l ions) TEV/EBIDTA P/EMax 40,139$ 10.4x 35.2xMin 429$ 3.3x 5.1xAverage 10,150$ 5.5x 14.1xMean 3,121$ 4.7x 8.6x

Source: RBN Energy, LLC


mailto:[email protected]


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Investment Banking and Securities Offered Through SDR Capital Markets, Inc., Member FINRA and SIPC.

Date Target Buyer(s) SegmentAmount($ in Mil)

TEV/Rev

TEV/EBITDA

06/23/2016 Papco, Inc. and Associated Petroleum Products, Inc.

World Fuel Services Corp. Refining & Marketing 230 0.14x

06/20/2016 PayRock Energy, LLC Marathon Oil Corporation Exploration & Production 888 - -

06/20/2016 Spire Inc. - Refining & Marketing 165 - -

06/14/2016 Hermes Consolidated, Inc. Par Wyoming, LLC Refining & Marketing 271 - -

06/08/2016 W Energy Partners Crestview Partners, L.P. Exploration & Production 150 - -

05/31/2016 Rose Rock Midstream, L.P. SemGroup Corporation Exploration & Production 387 1.79x 10.30x

05/24/2016 Tall City Exploration II LLC Denham Capital Management LP

Exploration & Production 300 - -

05/19/2016 FMC Technologies, Inc. Technip SA Equipment & Services 6,301 0.90x 6.53x

05/16/2016 Memorial Resource Development Corp. Range Resources Corporation

Storage & Transportation 6,965 10.03x 9.02x

04/27/2016 MPLX LP - Storage & Transportation 1,000 - -

04/27/2016 Sentinel Peak Resources LLC Quantum Energy Partners Exploration & Production 300 - -

04/22/2016 Venture Global LNG, Inc. - Integrated Oil & Gas 55 - -

3

ACCESS FULL LISTNote: These data represent recorded transactions only, and are not all-inclusive. Nevertheless, they are typically representative of the industry.

19 22 16

108

9

- 50

100 150

20 or more transactions

11-20 transactions

1-10 transactions

0 transactions

TRANSACTIONS BY SEGMENT TRANSACTIONS BY TYPE

TRANSACTIONS BY LOCATION

TRANSACTION ACTIVITY

Source: S&P Capital IQ



Strategic60%

Financial40%


http://sdrventures.com/oil-gas-ma-update/




Financial Buyer Inv. Date Select Holdings

Hillair Capital Management LLC 5/27/2016 • Legend Oil and Gas, Ltd. (OTCPK:LOGL) (Q2 2016 PP)4/7/20163/25/20161/29/2016

NGP Energy Capital Management 5/17/2016 • Teal Natural Resources, LLC (Q2 2016 PP)2/10/2016 • Black Mountain Oil & Gas, LLC (Q1 2016 PP)2/4/2016 • Torrent Oil LLC (Q1 2016 PP)2/1/2016 • PCORE Exploration & Production II LLC (Q1 2016 PP)

Energy Spectrum Capital 5/24/2016 • BlueJack Energy Solutions, LLC (Q2 2016 PP)5/20/2016 • Caliche LLC (Q2 2016 PP)

Oaktree Capital Management, L.P. 5/7/2016 • Harkand Group, US and African businesses (Q2 2016 PP)4/21/2016 • NGL Energy Partners LP (NYSE:NGL) (Q2 2016 PP)

EnCap Investments L.P. 5/6/2016 • Felix Energy II (Q2 2016 PP)12/31/2015 • Verdun Oil Company LLC (Q1 2016 PP)

4

ACTIVE BUYERSMOST ACTIVE STRATEGIC BUYERS

Note: These data represent recorded transactions only, and are not all-inclusive. Nevertheless, they are typically representative of the industry.

SELECT SPONSORS WITH ACTIVE PORTFOLIO HOLDINGSSource: S&P Capital IQ


Strategic Buyer Inv. Date Select Corporate Acquisitions

RelaDyne, Inc. 6/14/2016 • Hollingsworth Oil Company Inc., Lubricants Division (Q2 2016)5/11/2016 • US Refueling LLC (Q2 2016)2/22/2016 • Industrial Action Services (Q1 2016)1/1/2016 • Parker Oil Company (Q1 2016)12/16/2016 • Automotive Service, Inc. (Q4 2015)

ERG Resources, L.L.C. 6/21/2016 • AIX Energy, Inc. (Q2 2016)6/20/2016 • Antero Energy Partners, LLC (Q2 2016)8/14/2015 • Endeavor International Corp, Oil & Gas Assets in Alabama, Louisiana, and

Montana (Q3 2015)West Texas Resources, Inc. 3/4/2016 • Two Eagle Resource Inc: East Texas Oil & Gas Property (Q1 2016)

4/11/2016 • Moransco Energy Corporation: Dixie/Dzurich, Louisiana Production (Q2 2016)3/25/2016 • TW Lee: Unit No. 1 in Gregg County, Texas (Oil and Gas Exploration Facility)

(Q1 2016)9/30/2015 • Kiowa Oil Company: 33,000 acres of Oil and Gas Leases throughout US (Q2

2015)Southern Kentucky Energy, L.L.C. 4/25/2016 • Atmos Gathering Company, Natural Gas Gathering and Transmission in South

Central Kentucky (Q2 2016)4/25/2016 • Pioneer Oil Company, 100 Gas Producing Wells (Q2 2016)

Parsley Energy, Inc. 5/23/2016 • Lehm Capital Partners, Ltd., Trees Capital Partners Ltd., PNC Bank, National Association: 30,000 Acres Mineral Rights in Permain Basin (Q2 2016)

5/23/2016 • 885 Acres in Permain Basin (Q2 2016)4/4/2016 • Riverbend Permian LLC: 8,800 Acres in Permain Basin(Q2 2016)4/4/2016 • 10,737 Acres in Permain Basin(Q2 2016)4/4/2016 • 11,631 Acres in Permain Basin(Q2 2016)





PUBLIC BASKET

ROCKY MOUNTAIN PUBLIC BASKET

5


OIL & GAS SEGMENTS VS. S&P 500Running 12 Months

-30%

-20%

-10%

0%

10%

20%

30%

6/30/2015 8/31/2015 10/31/2015 12/31/2015 2/29/2016 4/30/2016 6/30/2016

Rocky Mountain Public Basket Storage & Transportation Refining & Marketing

Equipment & Services Exploration & Production Integrated Oil & Gas

S&P 500

Company Name Symbol State Market Cap($ in Mil) Price Stock Price

Quarter Change YTD Change Price/LMT EPS

Price/ Book

TEV/ Rev

TEV/ EBITDA

Cimarex Energy Co. NYSE:XEC CO $11,313 $119 22.7% 33% NM 4.3x 9.1x 18.4x

Antero Resources Corporation NYSE:AR CO $7,902 $26 4.5% 19% 12.8x 1.2x 9.0x 6.8x

Antero Midstream Partners LP NYSE:AM CO $4,910 $28 26.1% 22% 42.8x 4.5x 12.8x 20.2x

Questar Corporation NYSE:STR UT $4,451 $25 2.3% 30% 20.5x 3.3x 5.1x 9.3x

QEP Resources, Inc. NYSE:QEP CO $4,213 $18 24.9% 32% NM 1.1x 3.2x 7.9x

DCP Midstream Partners LP NYSE:DPM CO $3,957 $34 26.7% 40% 55.2x 1.5x 3.9x 11.9x

Whiting Petroleum Corp. NYSE:WLL CO $1,943 $9 16.0% -2% NM 0.4x 4.3x 6.5x

SM Energy Company NYSE:SM CO $1,838 $27 44.1% 37% NM 1.2x 3.3x 6.6x

Profire Energy, Inc. NasdaqCM:PFIE UT $59 $1 14.4% 12% NM 1.3x 1.4x 39.9x

Superior Drilling Products, Inc. AMEX:SDPI UT $38 $2 59.3% 116% NM 2.7x 5.7x NM

Segment Average $4,063 24.1% 34.0% 32.8x 2.1x 5.8x 14.2x

Segment Market Cap Sum $40,625


The Rocky Mountain public basket is comprised of companies across all of our industry segments that are headquartered in the Mountain Region. Both quarterly and year to date stock price appreciation indicates growth activity that surpasses most individually segmented public baskets in Q2 2016.





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PUBLIC BASKET (CONTINUED)

STORAGE & TRANSPORTATION



Price/ Book

TEV/ Rev

TEV/ EBITDA

Enterprise Products Partners L.P.

NYSE:EPD TX $61,098 $29 18.8% 14% 35.6x 2.8x 3.4x 16.1x

Kinder Morgan, Inc. NYSE:KMI TX $41,775 $19 4.8% 25% 25.7x 1.2x 6.1x 11.9x

Energy Transfer Partners, L.P. NYSE:ETP TX $19,797 $38 17.7% 13% NM 1.0x 1.9x 10.8x

Magellan Midstream Partners LP

NYSE:MMP OK $17,311 $76 10.5% 12% 33.8x 8.5x 9.6x 18.5x

Williams Companies, Inc. NYSE:WMB OK $16,235 $22 34.6% -16% 13.6x 2.9x 7.0x 14.0x

Energy Transfer Equity, L.P. NYSE:ETE TX $15,045 $14 101.5% 5% 16.9x NM 2.0x 14.7x

MPLX LP NYSE:MPLX OH $12,101 $34 13.3% -14% 126.6x 1.2x 16.0x 34.1x

Plains All American Pipeline, L.P.

NYSE:PAA TX $10,934 $27 31.1% 19% 188.5x 1.5x 1.1x 11.6x

ONEOK Inc. NYSE:OKE OK $9,969 $47 58.9% 92% 28.4x 34.7x 2.9x 13.4x

Buckeye Partners, L.P. NYSE:BPL TX $9,164 $70 3.5% 7% 32.0x 2.4x 4.2x 15.5x

Sunoco Logistics Partners L.P. NYSE:SXL PA $8,501 $29 14.7% 12% NM 1.2x 1.6x 14.3x

EQT GP Holdings, LP NYSE:EQGP PA $6,785 $25 -5.5% 23% NM NM 16.1x 20.0x

Questar Corporation NYSE:STR UT $4,451 $25 2.3% 30% 20.5x 3.3x 5.1x 9.3x

Rose Rock Midstream, L.P. NYSE:RRMS OK $972 $26 122.3% 75% 40.5x 4.5x 1.9x 10.9x

Segment Average $19,060 25.3% 16.0% 55.7x 5.7x 6.0x 16.3x


Source: S&P Capital IQREFINING & MARKETING



Price/ Book

TEV/ Rev

TEV/ EBITDA

Phillips 66 NYSE:PSX TX $41,700 $79 -8.4% -3% 13.8x 1.8x 0.6x 7.7x

Valero Energy Corporation NYSE:VLO TX $23,960 $51 -20.5% -28% 7.8x 1.2x 0.3x 3.7x

Marathon Petroleum Corporation

NYSE:MPC OH $20,113 $38 2.1% -27% 9.8x 1.6x 0.6x 7.3x

Tesoro Corporation NYSE:TSO TX $8,989 $75 -12.9% -29% 5.3x 1.7x 0.6x 4.0x

HollyFrontier Corporation NYSE:HFC TX $4,179 $24 -32.7% -40% 8.8x 0.8x 0.5x 4.6x

PBF Energy Inc. NYSE:PBF NJ $2,326 $24 -28.4% -35% 9.1x 1.5x 0.3x 5.6x

Western Refining, Inc. NYSE:WNR TX $1,883 $21 -29.1% -42% 7.3x 1.5x 0.5x 4.7x

CVR Energy, Inc. NYSE:CVI TX $1,346 $16 -40.6% -61% 35.6x 1.5x 0.4x 4.8x

Delek US Holdings, Inc. NYSE:DK TN $816 $13 -13.3% -46% NM 0.7x 0.3x 10.7x

Alon USA Energy, Inc. NYSE:ALJ TX $455 $6 -37.2% -56% 34.4x 0.8x 0.2x 3.4x

Segment Average $10,577 -22.1% -36.8% 14.7x 1.3x 0.4x 5.6x









EQUIPMENT & SERVICES



Price/ Book

TEV/ Rev

TEV/ EBITDA

Schlumberger Limited NYSE:SLB N/A $109,954 $79 7.2% 13% 38.7x 2.8x 3.7x 13.5x

Halliburton Company NYSE:HAL TX $38,916 $45 26.8% 33% 52.4x 3.0x 2.2x 13.0x

Baker Hughes Incorporated NYSE:BHI TX $19,763 $45 3.0% -2% NM 1.3x 1.6x 15.6x

National Oilwell Varco, Inc. NYSE:NOV TX $12,688 $34 8.2% 0% 56.4x 0.8x 1.2x 11.3x

FMC Technologies, Inc. NYSE:FTI TX $6,037 $27 -2.5% -8% 18.7x 2.3x 1.1x 7.8x

RPC Inc. NYSE:RES GA $3,379 $16 9.5% 30% NM 3.7x 3.1x 96.2x

Oceaneering International, Inc. NYSE:OII TX $2,928 $30 -10.2% -20% 14.6x 1.8x 1.2x 5.5x

Patterson-UTI Energy Inc. NasdaqGS:PTEN TX $3,142 $21 21.0% 41% NM 1.2x 2.5x 8.3x

Superior Energy Services, Inc. NYSE:SPN TX $2,787 $18 37.5% 37% NM 1.3x 1.7x 16.1x

Dril-Quip, Inc. NYSE:DRQ TX $2,218 $58 -3.5% -1% 15.9x 1.6x 2.3x 7.0x

SeaDrill Limited NYSE:SDRL N/A $1,647 $3 -1.8% -4% 2.2x 0.2x 3.2x 5.5x

Oil States International Inc. NYSE:OIS TX $1,689 $33 4.3% 21% NM 1.4x 1.9x 13.6x

McDermott International Inc. NYSE:MDR TX $1,187 $5 20.8% 47% 12.4x 0.8x 0.4x 4.5x

Segment Average $14,978 $34 8.8% 14.7% 25.3x 1.7x 2.0x 16.1x


Source: S&P Capital IQEXPLORATION & PRODUCTION



Price/ Book

TEV/ Rev

TEV/ EBITDA

Occidental Petroleum Corporation

NYSE:OXY TX $57,708 $76 10.4% 12% NM 2.4x 5.4x 13.5x

ConocoPhillips NYSE:COP TX $53,994 $44 8.3% -7% NM 1.4x 2.9x 15.4x

EOG Resources, Inc. NYSE:EOG TX $45,904 $83 14.9% 18% NM 3.7x 6.7x 18.6x

Anadarko Petroleum Corporation

NYSE:APC TX $27,180 $53 14.3% 10% NM 2.3x 5.6x 19.0x

Pioneer Natural Resources Co. NYSE:PXD TX $25,526 $151 7.4% 21% NM 2.6x 8.5x 23.0x

Apache Corp. NYSE:APA TX $21,073 $56 14.1% 25% NM 10.4x 5.3x 9.5x

Devon Energy Corporation NYSE:DVN OK $18,995 $36 32.1% 13% 19.4x 3.0x 2.9x 12.2x

Noble Energy, Inc. NYSE:NBL TX $15,373 $36 14.2% 9% NM 1.5x 7.5x 15.5x

Continental Resources, Inc. NYSE:CLR OK $16,768 $45 49.1% 97% NM 3.7x 9.9x 13.5x

Cimarex Energy Co. NYSE:XEC CO $11,313 $119 22.7% 33% NM 4.3x 9.1x 18.4x

Diamondback Energy, Inc. NasdaqGS:FANG TX $6,540 $91 18.2% 36% 186.4x 3.1x 16.2x 24.0x

Southwestern Energy Company NYSE:SWN TX $5,952 $13 55.9% 77% NM 4.2x 3.9x 11.4x

Parsley Energy, Inc. NYSE: PE TX $4,488 $27 19.7% 47% NM 3.0x 19.5x 29.9x

Gulfport Energy Corp. NasdaqGS:GPOR OK $3,918 $31 10.3% 27% NM 1.8x 6.5x 17.1x

Synergy Resources Corporation AMEX:SYRG CO $1,335 $7 -14.3% -22% NM 1.5x 12.6x 36.2x










INTEGRATED OIL & GAS



Price/ Book

TEV/ Rev

TEV/ EBITDA

Exxon Mobil Corporation NYSE:XOM TX $388,703 $94 12.1% 20% 38.1x 2.3x 2.0x 12.6x

Chevron Corporation NYSE:CVX CA $197,573 $105 9.9% 17% NM 1.3x 2.0x 11.5x

Occidental Petroleum Co. NYSE:OXY TX $57,708 $76 10.4% 12% NM 2.4x 5.4x 13.5x

ConocoPhillips NYSE:COP TX $53,994 $44 8.3% -7% NM 1.4x 2.9x 15.4x

Phillips 66 NYSE:PSX TX $41,700 $79 -8.4% -3% 13.8x 1.8x 0.6x 7.7x

Hess Corporation NYSE:HES NY $18,861 $60 14.2% 24% NM 0.9x 3.9x 13.1x

Marathon Petroleum Co. NYSE:MPC OH $20,113 $38 2.1% -27% 9.8x 1.6x 0.6x 7.3x








Source: GF Data*

*The most current source of GF Data is as of March 31, 2016, and lags one quarter behind the current quarter.Source: GF Data*


CAPITAL STACKOVERALL U.S. LOWER MIDDLE MARKET M&A ACTIVITY

M&A ACTIVITY

TRANSACTION MULTIPLESEBITDA Multiples By Transaction Size

34.3% 39.5% 40.1% 43.7% 37.9%

17.1% 13.1% 18.0% 16.5% 17.3%

48.0% 47.4% 41.9% 39.8% 44.9%

38.2% 35.6% 37.3% 44.1% 39.2%

16.4% 11.0% 14.7% 10.7% 19.6%

45.4% 53.3% 48.0% 45.3% 41.2%

36.6% 37.6% 36.5% 41.8% 36.3%

15.0% 13.1% 12.0% 11.5%18.5%

48.5% 49.3% 51.4% 46.8% 55.2%

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015 2016

Senior Debt Sub Debt Equity

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800

2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2

Cap

ital Invested ($m

m)

Dea

ls C

lose

d

Deals Closed Capital Invested

5.3x5.8x 5.9x

5.4x5.9x

6.5x6.4x 6.2x6.8x 6.6x 6.7x

6.1x

7.5x6.7x 6.8x

8.6x

7.5x6.9x

7.7x 7.4x 7.5x 7.8x

9.0x

7.7x

0.0x

3.0x

6.0x

9.0x

2011 2012 2013 2014 2015 YTD 2016

$10-25mm $25-50mm $50-100mm $100-250mm





SDR SERVICE OFFERINGS

COMPREHENSIVE OIL & GAS EXPERTISEOil & Gas may have stolen the national spotlight in recent years, but we havebeen involved in the oil & gas industry for well over a decade. Our experienceand drive puts us at the leading edge of information in the market, giving youthe advantage when the time comes to buy, sell or seek investments to growyour business.

Our oil & gas investment banking expertise includes the following segments:

SELECT TRANSACTION EXPERIENCESDR has completed numerous transactions types throughout the Oil & Gas industry, including:

CONTACT USChris BouckPrincipal – Oil & Gas [email protected]

Steve CrowerDirector – Oil & Gas [email protected]

PRIVATE CAPITAL FORMATIONSELL-SIDE ADVISORY

BUY-SIDE ADVISORY STRATEGIC CONSULTING

Storage & Transportation

Refining & Marketing

Equipment & Services

Exploration & Production

Integrated Oil & Gas

STRATEGIC SALESCAPITAL

FORMATION




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