Bakken and Permian: Deal Metrics in the Two Hottest Plays Ward - PowerPoint PPT Presentation

Bakken and Permian: Deal Metrics in the Two Hottest Plays Ward Polzin July 11, 2012

Industry Leading Investment Banking Practice Top Energy Advisor (1) Advisory Capital Markets ($ in millions) � � S ell-side & Buy-side Public Equity 2010 - 2012 YTD 2010 - 2012 YTD � � Joint Ventures Hybrids Firm # Deals Firm Value ($MM) � � Opinions Fixed income Tudor Pickering Holt & Co 63 Barclays $143,412 � � � � S S pecial Committee i l C itt Private placements P i t l t RBC Capital Markets 45 Goldman Sachs 121,989 � � Barclays 44 Tudor Pickering Holt & Co 76,902 Strategic advisory QIU Jefferies & Company 37 Credit Suisse 71,046 � Restructuring Bank of America Merrill Lynch 34 Evercore Partners Inc 65,828 Goldman Sachs 30 Citi 64,354 JPMorgan 30 Morgan Stanley 60,881 C Credit Suisse dit S i 28 28 J ff Jefferies & Company i & C 57 868 57,868 Citi 28 JPMorgan 50,179 Deutsche Bank 20 Deutsche Bank 40,258 Midstream/ MLP OFS Power Upstream Overview TPH combines banking expertise with engineering talent to deliver high quality advice to energy clients � Coverage of Midstream/ MLP, OFS , Power and Upstream sectors Banking Expertise Engineering Talent Managing Direct or Analyst 11 � S enior execution expertise in M&A, 12 Corporate Finance, A&D and Capital Markets Capital Markets Senior Advisor 1 � Direct or Industry/ engineering expertise 3 integrated into IB effort across all Associat e Vice President sectors 9 4 � Three-year old team achieved market share (1) in 2010 market share (1) in 2010 >25% 25% T t l T Total Team: 40 40 ___________________________________ 2 (1) S ource: Dealogic: United S tates Oil & Gas – Exploration & Development/ Field Equipment & S ervices/ Diversified/ Pipeline and Utility & Energy – Gas, pending and completed M&A transactions announced 1/ 1/ 2010 to 6/ 22/ 2012.

TPH Resource Experience TPH Investment Banking TPH Research � � Current Sell-side: Helis Oil & Gas Upstream companies covered with Bakken exposure: 12 � □ Current Sell-side: Cornerstone Natural Resource Selected Bakken operator coverage: CLR, EOG, HES, � Buy-side: Crestview Partners acquisit ion of S amson Investment Company NFX, OAS, OXY, STO, WLL, XOM � � Buy-side: S tatoil AS A acquisit ion of Brigham Exploration Published detailed Williston Basin primer � Sell-side: Citation Oil & Gas Corp. sale to multiple buyers Bakken � Sell-side: Kaiser Francis Oil Company � Sell-side: TRZ Energy (Tracker) sale to Hess � � S ll S ell-side: American Oil & Gas sale to Hess id A i Oil & G l t H � Atinum investment in Triangle Petroleum � Capital markets: Oasis IPO/ high yield & multiple BEXP follow-on offerings � � Buy-side: Apollo & Riverstone acquisition of El Paso’ s upstream business Upstream companies covered with Permian exposure: 24 � □ Buy-side: Laredo Petroleum acquisition of Broad Oak Energy S elected Permian operator coverage: APA, APC, BRY, � Sell-side: OGX Resources sale to undisclosed buyer CXO, DVN, EOG, OXY, PXD, SD, WLL, XEC � � S ell-side: Eagle Oil and Gas to Comstock Resources Published detailed Permian Basin primer focused on the Permian e a � � S ll S ell-side: RKI Exploration & Production equity investment id RKI E l ti & P d ti it i t t S S praberry Trend in March 2009 b T d i M h 2009 � Sell-side: Yates Drilling Company to undisclosed buyer � Buy-side: Crestview acquisition of equity in Select Energy Services � S ell-side: Arena Resources merger with SandRidge Energy � � Sell-side: Antares Energy sale to Chesapeake Upstream companies covered with Eagle Ford exposure: 15 � □ Buy-side: CNOOC/ Chesapeake Joint Venture Selected Eagle Ford operator coverage: APC, EOG, � Eagle Ford Sell-side: Pioneer Joint Venture with Reliance GDP, HK, NFX, PXD, ROS E, S M � � � � Buy-side: Large integrated B id L i t t d Recently released “ S R tl l d “ Sh ll hallow Dive” into Eagle Ford in 2010 Di ” i t E l F d i 2010 � � Buy-side: Potential $400MM private equity investment Continuing close coverage of well results in play � � S ell-side: Ellora Energy sale to ExxonMobil Upstream companies covered with Hayesville exposure: 13 � □ S ell-side: Undisclosed Private Company to undisclosed buyer Selected Haynesville operator coverage: APC, BG, CHK, Haynesville � Buy-side: Large public company seeking to establish E Tx position GDP, RRC, XCO, XOM � � Regency/ GE/ Alinda Haynesville Expansion Proj ect (midstream) Significant recent focus on midstream issues in basin � � Buy-side: $400MM Private Equity Joint Venture Upstream companies covered with Marcellus exposure: 16 � □ Buy-side: Enerplus Joint Venture with Chief for $406MM Selected Marcellus operator coverage: CHK, COG, CRZ, � Marcellus Buy-side: Potential $500MM Private Equity investment RRC, S WN, UPL, XCO � � Sell-side: Quest Resources Corp to Multi Released in-depth report on the play simultaneously with initiation of Cabot in June � � S ell-side: DIA mineral lease sale Upstream companies covered with Niobrara exposure: 14 � □ S ell-side: Undisclosed private company p p y Selected Niobrara operator coverage: APC, CHK, CLR, p g , , , Niobrara Ni b � S ell-side: Joint Resources EOG, NBL, S M � Buy-side: CNOOC/ Chesapeake Joint Venture � � Sell-side: Marquette sale to Hess Upstream companies covered with Utica exposure: 8 � □ Utica Sell-side: PDC Energy Joint Venture Selected Utica operator coverage: APC, CHK, HES 3

tage et the S Commodity Prices S

Long Term Oil Price is Key Today s Question: At what oil price do we drop rigs? Today’s Question: At what oil price do we drop rigs? Historical WTI Spot Historical WTI Spot Historical WTI Spot Historical WTI Spot 1/ 1/ 2009 Strip Historical WTI Spot 1/ 1/ 2009 Strip Historical WTI Spot 1/ 1/ 2010 Strip 1/ 1/ 2009 Strip 1/ 1/ 2009 Strip 1/ 1/ 2010 Strip 1/ 1/ 2009 Strip 1/ 1/ 2011 Strip 1/ 1/ 2010 Strip 1/ 1/ 2010 Strip 1/ 1/ 2011 Strip 1/ 1/ 2011 Strip 1/ 1/ 2012 Strip 1/ 1/ 2012 Strip 7/ 2/ 2012 Strip $150 $150 $150 $150 $150 $150 $130 $130 $130 $130 $130 $130 $110 $110 $110 $110 $110 $110 ) WTI Price ($/Bbl) WTI Price ($/Bbl) WTI Price ($/Bbl) WTI Price ($/Bbl) WTI Price ($/Bbl) WTI Price ($/Bbl) ) ) ) ) ) $90 $90 $90 $90 $90 $90 $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $70 $50 $50 $50 $50 $50 $50 $30 $30 $30 $30 $30 $30 5 ___________________________________ S ource: Bloomberg as of 7/ 2/ 2012.

Negative Gas Outlook Impacting Deal Metrics Historic Henry Hub Spot Historic Henry Hub Spot 1/ 1/ 2009 Strip Historic Henry Hub Spot Historic Henry Hub Spot 1/ 1/ 2010 Strip 1/ 1/ 2009 Strip Historic Henry Hub Spot 1/ 1/ 2009 Strip 1/ 1/ 2009 Strip 1/ 1/ 2011 Strip 1/ 1/ 2010 Strip 1/ 1/ 2010 Strip 1/ 1/ 2011 Strip 1/ 1/ 2012 Strip 7/ 2/ 2012 Strip $15 $15 $15 $15 $15 $12 $12 $12 $12 $12 ce ($/MMbtu) ce ($/MMbtu) ce ($/MMbtu) ce ($/MMbtu) ce ($/MMbtu) $9 $9 $9 $9 $9 Natural Gas Pric Natural Gas Pric Natural Gas Pric Natural Gas Pric Natural Gas Pric $6 $6 $6 $6 $6 $3 $3 $3 $3 $3 $0 $0 $0 $0 $0 6 ___________________________________ S ource: Bloomberg as of 7/ 2/ 2012.

Recent Decline in NGL Prices Ethane prices R epresentative NGL Barrel % of WTI WTI Spot Price ($/ Bbl) 100% $160 ~74% ~74% 75% $120 WTI S pot ($/ Bbl) of WTI NGL % 50% $80 NGL prices 25% $40 ~44% 0% $0 Jun-08 S ep-08 Dec-08 Mar-09 Jun-09 S ep-09 Dec-09 Mar-10 Jun-10 S ep-10 Dec-10 Mar-11 Jun-11 S ep-11 Dec-11 Mar-12 Jun-12 ___________________________________ 7 S ource: Bloomberg as of 7/ 2/ 2012. Note: Representative consists of barrel 40% ethane, 10% normal butane, 25% propane, 15% natural gasoline and 10% iso butane.

Liquids Rig Count S hift Has Been Dramatic U.S. Onshore Rig Count 2,500 2,030 2,005 1,955 2,000 534 27% 935 1,500 1,606 1,000 879 879 1,421 73% 1,070 700 500 424 179 0 Peak Trough Near-Term Peak 3Q11 Current 3Q09 2Q09 6/ 29/ 12 Liquids Gas ___________________________________ 8 S ource: Baker Hughes as of 6/ 29/ 2012. Note: “ Peak 3Q09” defined as 9/ 12/ 2008, “ Trough 2Q09” defined as 6/ 5/ 2009, and “ Near-Term Peak” as 10/ 7/ 2011.

Permian and Bakken Driving Oily Rig S hift S elected Gas S hales Permian Eagle Ford Bakken Granite Wash Niobrara Hz. Ms Lime 1,500 Selected Oily Rig Count: ~940 Bakken: ~215 1,200 t cted Rig Count 900 Selec 600 300 0 Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 Q3'09 Q1'10 Q3'10 Q1'11 Q3'11 Q1'12 9 ___________________________________ S ource: TPH Research as of 7/ 2/ 2012.