American Oil and Gas Reporter - May 2016 - 37

SpecialReport: Acquisitions & Divestitures
Buyers and sellers are accustomed to
doing deals in a variety of ways. When
deal customs deviate widely, it can be
very difficult to get to the finish line,
even if both parties agree on price. Therefore, it is important for the party facilitating
a transaction to standardize how a given
deal will work by transparently defining
what is expected of the seller and clearly
defining the rules of engagement for bidders and buyers. All the rules of the game
should be presented and agreed on before
the process begins, whether a sealed bid,
auction or private transaction.
Sellers of noncore, sub-$100 million
assets will be largely majors, large independents and large private companies.
The list of recent sellers includes Shell,
Chevron, Devon Energy, BHP Billiton
Petroleum, XTO Energy, Oxy, SM Energy,
Parsley Energy, Yates Petroleum, EnerVest,
Merit Energy, Newfield, Unit Petroleum,
Continental Resources, Apache, BP, Noble
Energy, WPX Energy, QEP Resources,
and Memorial Resource Development.
Buyers include publicly-traded companies, large private independents, pri-

vate-equity-sponsored management teams,
and small- to medium-sized regional operators. The large publicly traded and
larger private independents are acquiring
primarily bolt-on assets to existing core
assets or acreage swaps.
Private-equity-sponsored management
teams are a large component of the buyers
in the sub-$100 million asset space. Newly
minted private-equity-sponsored operators
are armed with capital from the likes of
NGP, Quantum, Kayne Anderson, Encap
Investments, and Denham Capital, and
they are taking the place of struggling or
bankrupt companies. Luxe Energy, Scala
Energy, Balidor, Bison, Rebellion, Colgate,
Percussion, PCORE II and Terra Energy
Partners are among the private-equitysponsored names entering the A&D space.
Participants in the oil patch are an optimistic lot, and many industry veterans
see this downturn as a buying opportunity.
Buyers are trying to be patient and conservative, but the fear of missing the low
point to buy assets has many buyers
scrambling to consummate deals.
In addition, small- to medium-sized

A&

D

regional operators typically were less involved in shale development and are not
as highly leveraged in many cases, so
they see this market as an opportunity to
acquire great assets at lower prices. ❒

CHRIS ATHERTON is president
of EnergyNet.com Inc., a transaction
advisory firm that specializes in sealed
bid, auction and private transactions
of producing fields, operated and
nonoperated working interests, overrides, producing royalties, nonproducing minerals, and nonproducing
leaseholds. He also serves as team
lead to EnergyNet's business development representatives. Before joining
EnergyNet in 2002, Atherton worked
in the power and gas origination
group at Enron. He is a past chairman
for the Society of Petroleum Engineers
Gulf Coast Section's business development study group. Atherton holds
a B.S. in business administration from
Texas State University.

MAY 2016 37
http://www.EnergyNet.com http://www.benposium.com
American Oil and Gas Reporter - May 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - May 2016
