The Business of Oil and Gas

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I recently came across this excellent article  by Chip Moldenhauer of Law IQ. Mr. Moldenhauer dispells some common misperceptions regarding the development of natural gas pipelines. The regulatory process administered by FERC is well developed and grounded in evidence. It balances the nation's need for more clean energy and the legitimate concerns of environmental advocates. The route to economic growth and reduced carbon emissions is facilitated by natural gas. A critical pathway is the natural gas pipeline network. Many thanks to Dale Honn of Natural Energy Field Sevices. For making me aware of the article....
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Down Load the Whitepaper Your client has achieved a major milestone thanks to your help: the plan of reorganization has been approved by the unsecured creditors and confirmed by the judge. As bankruptcy counsel you should feel good. Your job is basically done until the time comes, if ever, for the case to be dismissed. But do you have a sense of unease? Can these guys really pull it off? Will they make the same mistakes that landed them in Bankruptcy court this time? Will they make other, perhaps worse mistakes in the future? These are valid concerns and are intended to be handled in the plan negotiation. Indeed, the parties asked to take a haircut certainly will be asking these questions and any new capital source will closely scrutinize the plan. But there is more to achieving a good outcome than what most Disclosure Statements usually address. While this...
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What is the outlook for the Price of Oil?

Posted by on in The Business of Oil and Gas
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Many are the musings and ramblings on the outlook for the oil and gas industry. The few hard realities are that the demand for oil is in a long term (“secular” as we economists like to say) decline. There are permanent structural forces at work here: Slow economic growth, slowing population growth and increasing energy efficiency. Add to that the unprecedented increase in supply and the makings of a perfect storm are evident. The news is not good for oil market bulls. Because these trends are secular, the price of oil is likely to be low and volatile for many years, if not decades. Why? First, The US economy, burdened by regulation and declining work force participation, has headwinds along with fewer workers running the economic engine. Retirement of baby boomers is certainly a big and permanent demographic trend. However, more insidious is the low labor force participation rate. At...
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The standard definition of Enterprise Value is the Market Value of a company’s Debt and Equity less cash. It is typically used to determine the offering price for a takeover. This is illustrated in the diagram:   Source: Street of Walls; Investment Banking Technical Training. However, in exploration and production, Enterprise Value has an additional meaning: The market value of the entire Business minus the market value of the company’s individual Assets. That is, the intrinsic value of the company as a capital steward. Frequently a company becomes a takeover target when an acquirer perceives they can manage the target’s assets better than the incumbent team, creating added shareholder value. The ability to sustain a higher intrinsic value relative to its assets depends on the company’s stewardship of capital. Is the current leadership team better able to exploit and grow the assets than a suitor? If the business generates returns that...
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  • Libby Cheney
    Libby Cheney says #
    Very helpful!
    A clear and concise summary that pulls together many of the threads that we are left with after reading all the great leadership b
  • Jeff Brown
    Jeff Brown says #
    Thanks for weighing in Libby
    In this new price regime, I expect there will be a renewed emphasis on solid business fundamentals and focusing effort on plays al
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Climate Change: The Long View

Posted by on in The Business of Oil and Gas
Pope Francis’ release of his Encyclical Letter “On Care for our Common Home” raises many issues of interest and concern for the oil and gas industry. Looking deeper into the issue of climate change from the perspective of geologic time provides useful insight and suggests public policy positions and specific strategies for oil and gas executives. Climate change is a dynamic process and is by no means isolated to the age of industrialization. In fact, climate cycles have occurred across the Phanerozoic eon, the last 541 million years during which life on earth has been abundant1. During that period there have been at least four glacial periods including the more commonly known Pleistocene or Quaternary Ice Age lasting from about 2.58 million years ago (MYA) to the present. Earth is emerging from this glacial period with the retreat of polar ice evidenced over the last 15,000 years. Even during that brief...
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