Armada Intelligence August 2016 Oil & Gas Upstream Market...

Table of Contents1. Market Summary

2. Money & Commodity Markets

3. Energy Specific Market

4. Equity Market Index

5. Fuel Supply & Demand

6. Industry Statistics

8. Equity Markets

10. Comparisons

11. M&A Transactions

13. Closing Thoughts

About Armada Advisors, LLC

Armada Advisors, LLC is pleased to bring you this monthly edition of its monthly market update.

This periodical is designed to provide current information on the public equity markets, oil & gas

upstream markets, supply & demand trends, M&A activity as well as market and sector

commentary. If you would like to add any colleagues to this newsletter, please contact Brian

Humenesky at [email protected]

Market Summary

After the tumultuous markets of early summer in reaction to the U.K.'s unexpected

vote for exit, the markets were quiet during the month of August. Trading volumes

and volatility were at their lowest average levels in over a year. S&P 500 and

NASDAQ rose 0.01% and 0.56%, respectively, during the month of August.

Meanwhile, Treasury yields rose higher as Chairwoman Janet Yellen suggested late

in the month that at least one increase was possible in 2016, given the continued

solid economic data. Globally, WTI oil prices rebounded to nearly $50/barrel

during the month as OPEC crude oil output fell to three-month low in August. The

increased crude oil resurrected upstream activity in the U.S., namely in the

Permian Basin, an estimated 70 rigs have come online since May.

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Armada Intelligence August 2016Oil & Gas Upstream Market Monthly Newsletter

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

Aug '15 Oct '15 Dec '15 Feb '16 Apr '16 Jun '16 Aug '16

S&P 500 Index

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

Aug '15 Oct '15 Dec '15 Feb '16 Apr '16 Jun '16 Aug '16

NASDAQ Composite Index

1

####### ####### ####### 8/31/2015

8/31/2016 - 1 Wk. - 1 Mo. - 6 Mo. - 12 Mo.

%TCMSY011-Year 0.61% 0.59% 0.50% 0.67% 0.39%

%TCMSY1010-Year 1.58% 1.56% 1.46% 1.84% 2.21%

%TCMSY3030-Year 2.23% 2.24% 2.18% 2.69% 2.95%

####### ####### ####### 8/31/2015

8/31/2016 - 1 Wk. - 1 Mo. - 6 Mo. - 12 Mo.

$USDGBPGBP/USD 1.31 1.32 1.33 1.41 1.54

$USDEUREUR/USD 1.11 1.12 1.12 1.08 1.12

$JPYUSDUSD/JPY 103.46 100.55 102.30 113.96 121.30

$CNYUSDUSD/CNY 6.68 6.66 6.64 6.55 6.38

####### ####### ####### 8/31/2015

8/31/2016 - 1 Wk. - 1 Mo. - 6 Mo. - 12 Mo.

ICE: ^ICLCrude Oil 45.91 48.16 42.33 37.39 50.77

^GCGold 1307.90 1326.10 1353.10 1241.80 1132.00

COMEX:^SISilver 18.62 18.56 20.35 15.02 14.58

^WWheat 3.88 4.26 4.07 4.50 4.85

^CLCorn 44.70 46.77 41.60 34.66 49.20

Treasury Yields rose to their highest levels since the U.K.'s

BREXIT vote as the market's interest-rate hike expectation

rose. The yield on 10-year Treasury note added 12 basis

points during the month of August.

The Euro traded relatively flat against the Dollar over the

past month as a drop in German economic activity

weighted on the Euro and speculation over the chances of

the Fed raising interest rates in the near term faded.

OPEC crude oil output fell to a three-month low in August,

leading a drive in crude oil price. It is expected to continue

to rise as speculation OPEC will come to a conclude to

freeze output during the upcoming September meeting.

Treasury Rates 10-Year Treasury Yield

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16

(%)

1.00

1.10

1.20

1.30

1.40

1.50


(x)

EUR/ USD

Commodity Markets

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90


(%)

LIBOR (3 Month)

Exchange Rates

Oil & Gas Market Monthly Newsletter

Armada Intelligence

Money & Commodity MarketsAs of August 31, 2016

Source: Capital IQ

2

NYMEX:^CL 49.1 5-Year High 110.5 NYMEX:^NB 51.6 125.3

39.5 5-Year Low 27.5 42.8 27.9

7.5% 5-Year Change (49.7%) 6.1% (58.4%)

NYMEX:^NG 2.9 5-Year High 5.5 NYMEX:^RB 1.6 3.4

2.6 5-Year Low 1.6 1.5 0.9

0.4% 5-Year Change (28.8%) (11.1%) (52.0%)

NYSE:HCP

NYSE:SNH

NYSE:OHI

NYSE:LTC

NasdaqGS:SBRA

NYSE:NHI

NYSE:SNR

NYMEX:^QL 40.0 5-Year High 77.1 Region 2016E 2017P Region 2016E 2017P

39.5 5-Year Low 39.5

1.3% 5-Year Change (48.1%)6.7%

(3.8)

0.6 0.5

(4.0)

5-Year High

Global 2.4%

United

States

Euro Area

China

Brazil

Japan

2.4%

2.4 1.9

1.6 1.6

6.9%

One-Month High

Monthly Change

One-Month High

One-Month Low

Monthly Change

One-Month High One-Month High

One-Month Low

Monthly Change Monthly Change

One-Month Low One-Month Low

One-Month High

One-Month Low

Monthly Change

5-Year Low

5-Year Change

5-Year High

5-Year Low

5-Year Change

WTI Crude Oil Brent Crude Oil

0.0

20.0

40.0

60.0

80.0

100.0

120.0


($/B

arre

l)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0


($/B

arre

l)

0.0

1.0

2.0

3.0

4.0

5.0

6.0


($/M

MB

tu)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0


($/g

al)

Gasoline(RBOB)Henry Hub Natural Gas


Armada Intelligence

Energy Specific MarketAs of August 31, 2016

Coal(Central Appalachian)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0


($/T

)

GDP Growth Forecast 1

Source: Capital IQ, 1World Bank

3

^COMP 4,869.9 5-Year High 5,218.9 ^DJI 17,716.7 18,312.4

4,558.0 5-Year Low 2,335.8 16,516.5 10,655.3

6.8% 5-Year Change 75.1% 7.1% 43.6%

^SPX 2,063.9 5-Year High 2,130.8 IQ2671438 515.8 737.1

2,000.5 5-Year Low 1,099.2 485.1 388.6

(1.6%) 5-Year Change 58.0% (0.3%) (9.7%)

NYSE:HCP

NYSE:SNH

NYSE:OHI

NYSE:LTC

NasdaqGS:SBRA

NYSE:NHI

^IXC 30.3 5-Year High 49.5 IQ2667605 578.6 855.7

30.4 5-Year Low 23.9 541.3 433.9

(1.7%) 5-Year Change (24.3%) (0.5%) (12.1%)

One-Month High

One-Month Low

Monthly Change

One-Month High 5-Year High

One-Month Low 5-Year Low

Monthly Change 5-Year Change

One-Month High

One-Month Low

Monthly Change

One-Month High 5-Year High

One-Month Low 5-Year Low

Monthly Change 5-Year Change

5-Year High

5-Year Low

5-Year Change

One-Month High

One-Month Low

Monthly Change

One-Month High

One-Month Low

Monthly Change

NASDAQ Index Dow Jones Industrial Average Index

300.0

1,300.0

2,300.0

3,300.0

4,300.0

5,300.0

6,300.0


($)

200.0

5,200.0

10,200.0

15,200.0

20,200.0


($)

100.0

600.0

1,100.0

1,600.0

2,100.0

2,600.0


($)

150.0

250.0

350.0

450.0

550.0

650.0

750.0

850.0


($)

S&P U.S. Energy IndexS&P 500 Index


Armada Intelligence

Equity Market IndexAs of August 31, 2016

S&P Global Energy Index Dow Jones U.S. Oil & Gas Index

0.0

10.0

20.0

30.0

40.0

50.0

60.0


($)

150.0

250.0

350.0

450.0

550.0

650.0

750.0

850.0

950.0


($)

Source: Capital IQ

4

NYSE:HCP

NYSE:SNH

NYSE:OHI

NYSE:LTC

NasdaqGS:SBRA

NYSE:NHI

85.0

90.0

95.0

100.0

(MBl/D)Net Demand/Supply Total World Supply(R) Total World Demand(R)


Armada Intelligence

Fuel* Supply & DemandAs of August 31, 2016

OPEC39.55

Former Soviet Union

14.11

China4.40

Other Non-OECD12.04

U.S. (50 States)14.68

Canada4.60

Mexico2.51

North sea 3.28 Other OECD

1.48

OECD26.55

Former Soviet Union

4.98

Europe0.77

China11.72

Other Asia12.53

Other Non-OECD19.71

U.S. (50 States)…

U.S. Territories

0.40

Canada2.34

Europe13.87

Japan3.81

Other OECD6.23

OECD46.55

Supply (MBl/d) Demand (MBl/d)

Total World S & D

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

2011 2012 2013 2014 2015 2016 2017

(MBl/D) (MBl/D)Total World (L) U.S. (50 States) (R)

Total Inventory Net Withdrawals

ForecastsHistoricals

Source: EIA*Fuel includes crude oil, natural gas plant liquids, biofuels, other liquids, and refinery processing gains

5

8/2/2016 #######

9/2/2016 1/1/2016 - 1 Mo. - 1 Yr.

8/2/2016 #######

9/2/2016 1/1/2016 - 1 Mo. - 1 Yr.

609

89

2

8

7

38

23

76

1

U.S. Total

U.S. Oil

U.S. Gas

International (Excl.

Canada & U.S.)1137

752

125

32 29 40

938

402

61

937

437

60

1 1 5

2

698

536

162

1045

38 33 97

0 0 4

1799 15

25

Ardmore Woodford

Arkoma Woodford

Barnett

Cana Woodford

DJ-Niobrara 30

Vertical

15 19

Horizontal /

Directional

497 463 877

675

202

407

2 6

753

88

374

86

Mississippian

Permian

Utica

Williston

Others

Eagle Ford

Fayetteville

Granite Wash

Haynesville

Marcellus

2 4 20

255172202

14 15 31

512227 41

12

217

Total 497 877463

110 112 221

14 13 20

732728

15

53

165

698

200.0

700.0

1,200.0

1,700.0

2,200.0


(#)U.S. TotalInternational (Excl. Canada & U.S.)

Total Rig Counts (Oil + Gas)


Armada Intelligence

Industry StatisticsAs of August 31, 2016

Rig Counts by Category

Rig Count by Region (Oil + Gas)

YTD Change in U.S. Gas Rig Count

YTD Change in U.S. Oil Rig Count

(50.0%)

(100.0%)

(40.0%)

(5.9%)

(34.8%)

(51.5%)

0.0%

28.6%

0.0%

0.0%

(83.3%)

(3.3%)

(100.0%)

(47.2%)

(29.3%)

Ardmore Woodford

Arkoma Woodford

Barnett

Cana Woodford

DJ-Niobrara

Eagle Ford

Fayetteville

Granite Wash

Haynesville

Marcellus

Mississippian

Permian

Utica

Williston

Others

0.0%

0.0%

(100.0%)

(100.0%)

0.0%

(37.5%)

(100.0%)

(100.0%)

(44.0%)

(34.1%)

0.0%

(100.0%)

0.0%

0.0%

(46.9%)

Ardmore Woodford

Arkoma Woodford

Barnett

Cana Woodford

DJ-Niobrara

Eagle Ford

Fayetteville

Granite Wash

Haynesville

Marcellus

Mississippian

Permian

Utica

Williston

Others

Source: Baker Hughes

6

NYSE:HCP

NYSE:SNH

NYSE:OHI

NYSE:LTC

NasdaqGS:SBRA

NYSE:NHI

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

(MBl)Gasoline Regular Grade (cents per gallon) WTI Crude Oil (dollars per barrel)

4,000

5,000

6,000

7,000

8,000

9,000

10,000

200.0

210.0

220.0

230.0

240.0

250.0

260.0

270.0

MMi/D (MBl)

U.S. Gasoline Inventory (R) Vehicle Miles Traveled (L)


Armada Intelligence

Industry Statistics (II)As of August 31, 2016

Energy Price

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

Jan

Mar

May Ju

l

Sep

No

v

2012 2013 2014 2015 2016 2017

(MBl/D)SPR Non-SPR

Crude Oil Inventory

ForecastsHistoricals

Source: EIA

Gasoline Inventory

7

Equity Markets($MM, Except per Share Data) ($ in USD) Selected Financial Data

CY15A CY16E CY15A CY16E CY15A CY16E CY15A CY16E

Oil & Gas Drilling

CONSOL Energy Inc. NYSE:CNX 12/31/2015 18.2 19.4 5.0 94.1% 4,185 7,654 7.5x 11.8x 23.9% 28.8% 4.9x 4.8x NM NM -

Chevron Corporation NYSE:CVX 12/31/2015 100.6 107.0 74.9 94.0% 190,663 245,674 7.3x 10.7x 19.6% 18.5% 1.0x 1.6x 24.5 74.9 4.3%

Diamond Offshore Drilling, Inc. NYSE:DO 12/31/2015 18.5 26.1 15.6 70.7% 2,534 4,944 4.7x 7.3x 44.2% 41.6% 2.0x 3.2x 8.2 18.8 -

Ensco plc NYSE:ESV 12/31/2015 7.6 18.3 7.6 41.4% 2,288 7,991 4.4x 6.6x 52.6% 46.6% 2.7x 3.4x 3.5 6.1 0.5%

Helmerich & Payne, Inc. NYSE:HP 9/30/2015 60.5 69.8 42.9 86.7% 6,563 8,002 4.3x 17.8x 35.9% 29.3% (0.2x) (0.8x) 15.6 NM 4.6%

Nabors Industries Ltd. NYSE:NBR 12/31/2015 9.9 12.1 5.5 82.3% 2,817 6,561 5.2x 10.9x 29.2% 26.7% 3.0x 5.5x NM NM 2.4%

Occidental Petroleum Corporation NYSE:OXY 12/31/2015 76.9 78.3 59.6 98.1% 58,708 70,790 10.1x 18.7x 45.0% 34.8% 0.9x 1.2x 567.4 NM 4.0%

Rowan Companies plc NYSE:RDC 12/31/2015 12.5 20.9 11.2 59.6% 1,563 4,970 4.2x 6.2x 48.0% 46.4% 2.2x 2.3x 4.8 7.5 -

Transocean Ltd. NYSE:RIG 12/31/2015 9.7 17.0 8.2 57.1% 3,544 14,236 3.6x 8.5x 44.3% 43.2% 2.0x 3.6x 3.1 11.4 -

Exxon Mobil Corporation NYSE:XOM 12/31/2015 87.1 95.1 72.0 91.6% 361,339 416,452 9.1x 11.5x 15.0% 14.8% 0.9x 1.1x 20.1 36.0 3.4%

Average 63,420 78,727 6.0x 11.0x 35.8% 33.1% 1.9x 2.6x 80.9 25.8 1.9%

Median 3,865 7,997 4.9x 10.8x 40.0% 32.0% 2.0x 2.8x 11.9 15.1 1.5%

Oil & Gas Equipments and Services

Baker Hughes Incorporated NYSE:BHI 12/31/2015 49.1 57.3 38.9 85.7% 21,023 28,042 12.1x 89.4x 11.5% 3.2% 0.9x (2.8x) NM NM 1.4%

FMC Technologies, Inc. NYSE:FTI 12/31/2015 28.2 35.5 22.8 79.5% 6,363 8,780 7.1x 16.5x 15.2% 11.5% 0.2x 0.5x 12.6 30.2 -

Halliburton Company NYSE:HAL 12/31/2015 43.0 46.9 28.5 91.8% 37,045 53,117 8.3x 26.4x 17.6% 12.6% 1.3x 4.9x 21.9 NM 1.7%

National Oilwell Varco, Inc. NYSE:NOV 12/31/2015 33.5 42.3 26.3 79.2% 12,669 17,678 6.4x 65.3x 15.5% 3.7% 0.8x 6.0x 11.6 NM 0.6%

Schlumberger Limited NYSE:SLB 12/31/2015 79.0 83.9 61.1 94.2% 110,421 135,395 10.6x 19.9x 27.7% 23.6% 1.7x 2.8x 20.5 72.4 2.5%

Weatherford International plc NYSE:WFT 12/31/2015 5.5 11.3 4.9 48.6% 4,902 12,651 10.4x 36.6x 13.9% 5.9% 5.4x 19.6x NM NM -

Average 32,070 42,610 9.1x 42.3x 16.9% 10.1% 1.7x 5.1x 16.6 51.3 1.0%

Median 16,846 22,860 9.3x 31.5x 15.3% 8.7% 1.1x 3.8x 16.6 51.3 1.0%

Oil & Gas Refining & Marketing

Kinder Morgan, Inc. NYSE:KMI 12/31/2015 21.9 32.7 12.0 66.9% 48,776 92,972 10.1x 12.7x 52.5% 54.7% 5.7x 5.9x 20.5 33.2 2.3%

Marathon Petroleum Corporation NYSE:MPC 12/31/2015 42.5 59.3 30.7 71.6% 22,756 43,007 6.6x 9.6x 9.5% 7.1% 1.6x 2.1x 8.7 18.2 3.4%

ONEOK Inc. NYSE:OKE 12/31/2015 46.9 49.7 18.9 94.3% 9,867 22,660 12.2x 13.2x 18.5% 20.2% 6.2x 5.3x 16.1 28.1 5.2%

Phillips 66 NYSE:PSX 12/31/2015 78.5 93.7 72.9 83.7% 41,231 53,549 6.7x 12.2x 7.4% 4.5% 0.8x 1.5x 10.5 22.4 3.2%

Spectra Energy Corp. NYSE:SE 12/31/2015 35.6 37.1 22.0 96.1% 24,982 43,951 12.3x 15.3x 52.5% 53.5% 5.3x 5.1x 20.7 30.5 4.5%

Tesoro Corporation NYSE:TSO 12/31/2015 75.4 118.2 68.6 63.8% 9,004 17,304 4.7x 7.4x 13.7% 9.5% 0.8x 1.4x 7.4 14.1 2.9%

Valero Energy Corporation NYSE:VLO 12/31/2015 55.4 73.0 47.2 75.8% 25,535 38,798 4.3x 8.1x 10.2% 6.8% 0.4x 0.5x 7.4 14.5 4.3%

Williams Companies, Inc. NYSE:WMB 12/31/2015 27.9 48.2 11.2 58.0% 20,973 56,076 13.1x 13.0x 55.8% 56.4% 5.9x 5.9x 47.6 41.1 2.9%

Average 25,391 46,040 8.8x 11.4x 27.5% 26.6% 3.3x 3.5x 17.4 25.2 3.6%

Median 23,869 43,479 8.4x 12.4x 16.1% 14.8% 3.4x 3.6x 13.3 25.2 3.3%

Oil & Gas Exploration and Production

Apache Corp. NYSE:APA 12/31/2015 49.7 58.3 34.4 85.3% 18,857 30,332 6.6x 10.6x 61.2% 53.3% 1.9x 2.6x 1,564 19.4x 2.0%

Anadarko Petroleum Corporation NYSE:APC 12/31/2015 53.5 73.4 30.5 72.9% 27,294 49,528 12.4x 13.4x 40.4% 45.3% 4.7x 4.4x 2,057 24.1x 0.4%

Antero Resources Corporation NYSE:AR 12/31/2015 25.6 30.1 19.1 84.9% 7,852 13,491 9.9x 9.7x 30.9% 69.8% 3.8x 3.0x 2,202 6.1x -

Black Stone Minerals, L.P. NYSE:BSM 12/31/2015 16.2 17.0 10.8 95.2% 3,093 3,462 11.5x 14.0x 63.9% 76.9% 0.2x 1.1x 50 69.5x 7.1%

Chesapeake Energy Corporation NYSE:CHK 12/31/2015 6.4 9.3 1.6 68.0% 4,925 17,875 6.6x 15.6x 19.1% 29.4% 4.1x 8.4x 1,504 11.9x -

Cabot Oil & Gas Corporation NYSE:COG 12/31/2015 24.6 26.1 15.0 94.5% 11,471 13,529 11.5x 22.1x 60.1% 48.9% 2.5x 1.7x 1,365 9.9x 0.3%

ConocoPhillips NYSE:COP 12/31/2015 41.1 56.7 31.9 72.4% 50,841 82,668 12.7x 14.8x 20.5% 19.8% 3.5x 4.6x 8,180 10.1x 2.4%

Carrizo Oil & Gas Inc. NasdaqGS:CRZO 12/31/2015 38.3 43.2 18.4 88.7% 2,282 3,582 6.5x 9.5x 73.0% 72.6% 2.7x 3.4x 171 21.0x -

Concho Resources, Inc. NYSE:CXO 12/31/2015 129.2 136.4 72.5 94.7% 18,214 22,028 8.7x 13.9x 95.0% 93.9% 1.8x 1.8x 623 35.3x -

Denbury Resources Inc. NYSE:DNR 12/31/2015 3.1 4.7 1.0 65.8% 1,210 4,294 4.3x 10.2x 53.1% 41.4% 3.5x 7.3x 289 14.9x -

Devon Energy Corporation NYSE:DVN 12/31/2015 43.3 47.8 18.7 90.7% 22,688 41,356 5.3x 17.5x 40.1% 24.0% 2.1x 4.7x 2,182 19.0x 0.6%

Energen Corp. NYSE:EGN 12/31/2015 57.5 61.6 22.9 93.4% 5,584 6,445 5.4x 22.4x 84.2% 51.5% 1.0x 0.8x 355 18.2x -

EOG Resources, Inc. NYSE:EOG 12/31/2015 88.5 91.8 60.2 96.4% 49,120 56,886 11.0x 20.2x 46.6% 39.7% 1.5x 2.2x 2,118 26.9x 0.8%

EP Energy Corporation NYSE:EPE 12/31/2015 4.1 7.8 1.7 52.7% 1,040 5,009 3.6x 5.0x 86.0% 94.1% 2.9x 3.9x 546 9.2x -

EQT Corporation NYSE:EQT 12/31/2015 71.5 79.3 47.8 90.1% 12,387 20,639 9.0x 16.7x 59.1% 70.4% 1.1x 0.4x 1,564 13.2x 0.2%

Diamondback Energy, Inc. NasdaqGS:FANG 12/31/2015 95.3 98.6 57.6 96.6% 7,436 8,376 11.3x 26.1x 102.3% 67.8% 1.0x 0.9x 157 53.4x -

Gulfport Energy Corp. NasdaqGS:GPOR 12/31/2015 28.6 35.8 20.3 79.8% 3,586 4,939 9.7x 12.1x 51.0% 79.5% 2.3x 1.4x 284 17.4x -

Hess Corporation NYSE:HES 12/31/2015 54.3 63.4 34.4 85.7% 17,040 27,743 20.3x 19.4x 14.0% 30.6% 4.3x 2.4x 1,086 25.5x 1.8%

Kosmos Energy Ltd. NYSE:KOS 12/31/2015 6.2 7.8 3.5 79.5% 2,398 3,705 35.3x 19.6x 15.5% 45.6% 8.0x 5.7x 76 48.5x -

Laredo Petroleum, Inc. NYSE:LPI 12/31/2015 12.3 14.0 4.1 88.0% 2,955 4,368 6.5x 10.3x 77.8% 77.0% 2.9x 3.2x 126 34.7x -

Marathon Oil Corporation NYSE:MRO 12/31/2015 15.0 20.2 6.7 74.4% 12,726 22,591 4.5x 15.6x 54.7% 33.0% 1.9x 3.2x 2,163 10.4x 1.3%

Murphy Oil Corporation NYSE:MUR 12/31/2015 26.7 36.2 15.8 73.7% 4,601 7,324 5.4x 8.4x 40.6% 45.9% 2.3x 2.5x 774 9.5x 3.7%

Noble Energy, Inc. NYSE:NBL 12/31/2015 34.5 38.7 25.7 89.1% 14,777 24,001 11.6x 10.1x 57.9% 65.2% 3.9x 2.8x 1,421 16.9x 1.2%

Newfield Exploration Co. NYSE:NFX 12/31/2015 43.4 47.2 22.3 91.8% 8,533 11,128 7.2x 12.5x 68.7% 59.9% 2.3x 2.5x 509 21.9x -

Oasis Petroleum Inc. NYSE:OAS 12/31/2015 9.5 13.8 4.3 68.9% 1,710 3,844 4.0x 7.8x 103.9% 68.2% 2.8x 4.3x 218 17.6x -

PDC Energy, Inc. NasdaqGS:PDCE 12/31/2015 66.4 69.4 45.7 95.6% 3,176 3,780 6.3x 8.0x 74.4% 95.2% 1.5x 0.8x 273 13.9x -

Parsley Energy, Inc. NYSE:PE 12/31/2015 33.9 34.6 14.0 97.9% 6,079 7,630 15.6x 22.7x 73.4% 72.6% 1.1x 0.9x 124 61.6x -

Pioneer Natural Resources Co. NYSE:PXD 12/31/2015 179.1 185.6 107.8 96.5% 30,389 35,894 12.0x 18.6x 36.2% 54.4% 1.3x 1.0x 664 54.0x 0.0%

Range Resources Corporation NYSE:RRC 12/31/2015 38.6 46.5 20.5 83.0% 6,429 8,997 4.6x 14.3x 91.9% 46.6% 1.8x 4.1x 1,543 5.8x 0.2%

Southwestern Energy Company NYSE:SWN 12/31/2015 13.9 16.2 5.2 85.7% 6,655 13,429 6.0x 18.1x 39.5% 30.3% 3.8x 6.4x 1,036 13.0x -

Whiting Petroleum Corp. NYSE:WLL 12/31/2015 7.3 22.4 3.5 32.5% 2,008 6,992 6.2x 8.9x 55.6% 56.8% 4.5x 6.3x 821 8.5x -

Cimarex Energy Co. NYSE:XEC 12/31/2015 132.2 134.2 75.6 98.5% 12,567 14,695 12.2x 21.8x 51.8% 52.8% 0.9x 1.3x 485 30.3x 0.2%

Average 11,873 18,143 9.5x 14.7x 57.6% 56.6% 2.6x 3.1x ####### 23.5x 0.7%

Median 7,046 12,279 8.0x 14.2x 56.8% 53.8% 2.3x 2.7x 719.2x 17.9x 0.0%

P /E

Ticker

Net

Proved

Reserves

(MMboe)

Security

Latest FY

Ended

Last

08/31/16

Net Debt / EBITDA52 Wk.

High

52 Wk.

Low

% of 52

Wk. high

Market

Cap

Enterprise

Value

EV / EBITDA EBITDA Margin Dividend

Yield

TEV /

Proved

Reserves(

MMboe)

8

Equity Markets (Cont')($MM, Except per Share Data)

Security Ticker2014 2015 2016E '14-'15 '15-'16E 2014 2015 2016E 2014 2015 2016E '14-'15 '15-'16E

Oil & Gas Drilling

CONSOL Energy Inc. NYSE:CNX 3,727 3,114 2,244 (16.4%) (27.9%) 1,053 745 646 28.3% 23.9% 28.8% 26.1% 26.4%

Chevron Corporation NYSE:CVX 211,970 138,477 124,297 (34.7%) (10.2%) 47,995 27,139 23,011 22.6% 19.6% 18.5% 21.1% 19.1%

Diamond Offshore Drilling, Inc. NYSE:DO 2,815 2,419 1,635 (14.0%) (32.4%) 1,202 1,069 681 42.7% 44.2% 41.6% 43.5% 42.9%

Ensco plc NYSE:ESV 4,565 4,063 2,615 (11.0%) (35.6%) 2,356 2,137 1,218 51.6% 52.6% 46.6% 52.1% 49.6%

Helmerich & Payne, Inc. NYSE:HP 3,720 3,165 1,537 (14.9%) (51.4%) 1,559 1,136 450 41.9% 35.9% 29.3% 38.9% 32.6%

Nabors Industries Ltd. NYSE:NBR 6,798 3,867 2,249 (43.1%) (41.8%) 1,743 1,127 600 25.6% 29.2% 26.7% 27.4% 27.9%

Occidental Petroleum Corporation NYSE:OXY 22,666 12,480 10,849 (44.9%) (13.1%) 13,255 5,611 3,777 58.5% 45.0% 34.8% 51.7% 39.9%

Rowan Companies plc NYSE:RDC 1,824 2,137 1,733 17.1% (18.9%) 709 1,026 804 38.9% 48.0% 46.4% 43.4% 47.2%

Transocean Ltd. NYSE:RIG 9,174 6,953 3,855 (24.2%) (44.6%) 3,790 3,083 1,666 41.3% 44.3% 43.2% 42.8% 43.8%

Exxon Mobil Corporation NYSE:XOM 411,939 268,882 244,444 (34.7%) (9.1%) 69,213 40,325 36,199 16.8% 15.0% 14.8% 15.9% 14.9%

Average 67,920 44,556 39,546 (22.1%) (28.5%) 14,288 8,340 6,905 36.8% 35.8% 33.1% 36.3% 34.4%

Median 5,681 3,965 2,432 (20.3%) (30.2%) 2,049 1,636 1,011 40.1% 40.0% 32.0% 40.9% 36.2%

Oil & Gas Equipments and Services

Baker Hughes Incorporated NYSE:BHI 24,551 15,742 9,946 (35.9%) (36.8%) 4,843 1,815 314 19.7% 11.5% 3.2% 15.6% 7.3%

FMC Technologies, Inc. NYSE:FTI 7,943 6,363 4,655 (19.9%) (26.8%) 1,299 967 533 16.3% 15.2% 11.5% 15.8% 13.3%

Halliburton Company NYSE:HAL 32,870 23,633 15,982 (28.1%) (32.4%) 7,174 4,155 2,012 21.8% 17.6% 12.6% 19.7% 15.1%

National Oilwell Varco, Inc. NYSE:NOV 21,440 14,757 7,303 (31.2%) (50.5%) 4,586 2,283 271 21.4% 15.5% 3.7% 18.4% 9.6%

Schlumberger Limited NYSE:SLB 48,580 35,475 28,774 (27.0%) (18.9%) 13,825 9,820 6,793 28.5% 27.7% 23.6% 28.1% 25.6%

Weatherford International plc NYSE:WFT 14,911 9,433 5,893 (36.7%) (37.5%) 2,974 1,307 346 19.9% 13.9% 5.9% 16.9% 9.9%

Average 25,049 17,567 12,092 (29.8%) (33.8%) 5,783 3,391 1,711 21.3% 16.9% 10.1% 19.1% 13.5%

Median 22,996 15,250 8,625 (29.6%) (34.6%) 4,715 2,049 440 20.7% 15.3% 8.7% 17.7% 11.6%

Oil & Gas Refining & Marketing

Kinder Morgan, Inc. NYSE:KMI 16,226 14,403 13,384 (11.2%) (7.1%) 6,502 7,562 7,325 40.1% 52.5% 54.7% 46.3% 53.6%

Marathon Petroleum Corporation NYSE:MPC 98,102 72,258 62,690 (26.3%) (13.2%) 5,377 6,856 4,462 5.5% 9.5% 7.1% 7.5% 8.3%

ONEOK Inc. NYSE:OKE 12,195 7,763 8,528 (36.3%) 9.8% 1,438 1,434 1,721 11.8% 18.5% 20.2% 15.1% 19.3%

Phillips 66 NYSE:PSX 164,093 100,949 96,659 (38.5%) (4.2%) 7,183 7,502 4,388 4.4% 7.4% 4.5% 5.9% 6.0%

Spectra Energy Corp. NYSE:SE 5,903 5,234 5,362 (11.3%) 2.5% 3,146 2,746 2,867 53.3% 52.5% 53.5% 52.9% 53.0%

Tesoro Corporation NYSE:TSO 40,633 28,711 24,749 (29.3%) (13.8%) 2,288 3,924 2,342 5.6% 13.7% 9.5% 9.6% 11.6%

Valero Energy Corporation NYSE:VLO 130,844 87,804 70,180 (32.9%) (20.1%) 7,370 8,990 4,795 5.6% 10.2% 6.8% 7.9% 8.5%

Williams Companies, Inc. NYSE:WMB 7,637 7,360 7,635 (3.6%) 3.7% 3,320 4,104 4,305 43.5% 55.8% 56.4% 49.6% 56.1%

Average 59,454 40,560 36,148 (23.7%) (5.3%) 4,578 5,390 4,026 21.2% 27.5% 26.6% 24.4% 27.0%

Median 28,430 21,557 19,066 (27.8%) (5.7%) 4,349 5,480 4,347 8.7% 16.1% 14.8% 12.4% 15.4%

Oil & Gas Exploration and Production

Apache Corp. NYSE:APA 13,851 6,366 5,358 (54.0%) (15.8%) 15,258 3,896 2,856 110.2% 61.2% 53.3% 85.7% 57.3%

Anadarko Petroleum Corporation NYSE:APC 18,470 8,698 8,171 (52.9%) (6.1%) 11,689 3,513 3,703 63.3% 40.4% 45.3% 51.8% 42.9%

Antero Resources Corporation NYSE:AR 2,721 3,955 1,991 45.4% (49.7%) 1,162 1,221 1,390 42.7% 30.9% 69.8% 36.8% 50.4%

Black Stone Minerals, L.P. NYSE:BSM - 393 321 NA (18.3%) - 251 247 NM 63.9% 76.9% NM 70.4%

Chesapeake Energy Corporation NYSE:CHK 20,951 12,764 3,894 (39.1%) (69.5%) 5,084 2,435 1,144 24.3% 19.1% 29.4% 21.7% 24.2%

Cabot Oil & Gas Corporation NYSE:COG 2,173 1,357 1,251 (37.5%) (7.8%) 1,295 815 612 59.6% 60.1% 48.9% 59.8% 54.5%

ConocoPhillips NYSE:COP 55,517 30,935 28,252 (44.3%) (8.7%) 21,729 6,348 5,588 39.1% 20.5% 19.8% 29.8% 20.1%

Carrizo Oil & Gas Inc. NasdaqGS:CRZO 697 623 521 (10.5%) (16.4%) 533 455 378 76.6% 73.0% 72.6% 74.8% 72.8%

Concho Resources, Inc. NYSE:CXO 2,660 1,804 1,693 (32.2%) (6.2%) 2,033 1,713 1,589 76.4% 95.0% 93.9% 85.7% 94.4%

Denbury Resources Inc. NYSE:DNR 2,435 1,769 1,019 (27.3%) (42.4%) 1,370 939 422 56.3% 53.1% 41.4% 54.7% 47.3%

Devon Energy Corporation NYSE:DVN 19,566 13,145 9,891 (32.8%) (24.8%) 7,164 5,267 2,369 36.6% 40.1% 24.0% 38.3% 32.0%

Energen Corp. NYSE:EGN 1,677 879 559 (47.6%) (36.3%) 949 740 288 56.6% 84.2% 51.5% 70.4% 67.8%

EOG Resources, Inc. NYSE:EOG 18,035 8,757 7,083 (51.4%) (19.1%) 8,862 4,084 2,813 49.1% 46.6% 39.7% 47.9% 43.2%

EP Energy Corporation NYSE:EPE 3,084 1,908 1,067 (38.1%) (44.1%) 1,547 1,641 1,004 50.2% 86.0% 94.1% 68.1% 90.1%

EQT Corporation NYSE:EQT 2,470 2,340 1,759 (5.3%) (24.8%) 1,722 1,382 1,238 69.7% 59.1% 70.4% 64.4% 64.7%

Diamondback Energy, Inc. NasdaqGS:FANG 496 447 474 (9.9%) 6.1% 403 457 321 81.2% 102.3% 67.8% 91.8% 85.1%

Gulfport Energy Corp. NasdaqGS:GPOR 671 709 513 5.7% (27.7%) 492 362 408 73.2% 51.0% 79.5% 62.1% 65.2%

Hess Corporation NYSE:HES 11,439 6,561 4,679 (42.6%) (28.7%) 6,823 919 1,432 59.6% 14.0% 30.6% 36.8% 22.3%

Kosmos Energy Ltd. NYSE:KOS 883 472 414 (46.6%) (12.3%) 554 73 189 62.7% 15.5% 45.6% 39.1% 30.6%

Laredo Petroleum, Inc. NYSE:LPI 794 607 551 (23.6%) (9.1%) 598 472 424 75.3% 77.8% 77.0% 76.6% 77.4%

Marathon Oil Corporation NYSE:MRO 11,258 5,861 4,385 (47.9%) (25.2%) 4,672 3,206 1,448 41.5% 54.7% 33.0% 48.1% 43.9%

Murphy Oil Corporation NYSE:MUR 5,476 3,033 1,911 (44.6%) (37.0%) 3,274 1,230 877 59.8% 40.6% 45.9% 50.2% 43.2%

Noble Energy, Inc. NYSE:NBL 5,101 3,133 3,642 (38.6%) 16.2% 3,175 1,815 2,373 62.2% 57.9% 65.2% 60.1% 61.5%

Newfield Exploration Co. NYSE:NFX 2,288 1,557 1,486 (31.9%) (4.6%) 1,445 1,070 890 63.2% 68.7% 59.9% 65.9% 64.3%

Oasis Petroleum Inc. NYSE:OAS 1,390 790 721 (43.2%) (8.7%) 953 820 492 68.5% 103.9% 68.2% 86.2% 86.1%

PDC Energy, Inc. NasdaqGS:PDCE 856 595 497 (30.5%) (16.5%) 361 443 473 42.2% 74.4% 95.2% 58.3% 84.8%

Parsley Energy, Inc. NYSE:PE 302 266 463 (11.8%) 74.1% 206 195 337 68.3% 73.4% 72.6% 70.9% 73.0%

Pioneer Natural Resources Co. NYSE:PXD 5,055 4,825 3,542 (4.5%) (26.6%) 2,525 1,747 1,926 50.0% 36.2% 54.4% 43.1% 45.3%

Range Resources Corporation NYSE:RRC 1,992 1,598 1,348 (19.8%) (15.6%) 1,170 1,469 629 58.7% 91.9% 46.6% 75.3% 69.3%

Southwestern Energy Company NYSE:SWN 4,038 3,133 2,445 (22.4%) (21.9%) 2,315 1,237 742 57.3% 39.5% 30.3% 48.4% 34.9%

Whiting Petroleum Corp. NYSE:WLL 3,085 2,051 1,380 (33.5%) (32.7%) 2,359 1,140 784 76.5% 55.6% 56.8% 66.0% 56.2%

Cimarex Energy Co. NYSE:XEC 2,424 1,453 1,274 (40.1%) (12.3%) 1,627 753 673 67.1% 51.8% 52.8% 59.5% 52.3%

Average 7,212 4,309 3,330 (29.0%) (17.6%) 3,645 1,674 1,287 59.8% 57.8% 56.8% 58.7% 57.3%

Median 2,565 1,856 1,589 (32.8%) (17.4%) 1,496 1,226 883 59.6% 58.5% 53.8% 59.8% 59.4%

Revenue Revenue Growth EBITDA EBITDA Margin Avg. Margin

9

Comparison Graphics: Oil & Gas Upstream

Index, 100 = August 01, 2011

Historical Relative Performance

EV / EBITDA EBITDA Margin (%)

Net Debt / EBITDA EV / (EBITDA - CapEx)

Drilling99.2(-0.8%)

Equip. Services71.3(-28.7%)

Exp. & Prod.63.8(-36.2%)

Refing & Marketing149.4(+49.4%)

SP500168.5(+68.5%)

0.00

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100.00

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6/3

0/2

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1/2

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/31

/20

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/31

/20

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/31

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/31

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/31

/20

16

6.0x 6.0x

11.0x

6.4x

9.1x

42.3x

6.5x

9.5x

14.7x

11.4x 8.8x 11.4x

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2014A 2015A 2016E

Drilling Equip. Services Exp. & Prod. Refining & Marketing

37% 36%33%

21%

17%

10%

61%58% 57%

21%

28% 27%

0%

10%

20%

30%

40%

50%

60%

2014A 2015A 2016E


1.5x

1.9x

2.6x

0.8x

1.7x

5.1x

1.6x

2.6x

3.1x3.3x 3.3x 3.5x

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2014A 2015A 2016E


(4.6x)

186.8x

(8.4x)

10.3x 16.1x

(70.9x)

2.5x

239.4x

(28.0x)

2.1x 6.1x

(37.6x)

-100.0

-50.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2014A 2015A 2016E


10

Announced

Date States Sector

Transaction

Value (MM)

8/29/2016 - E&P 425.0$

8/29/2016 TX S&S -$

8/25/2016 TX E&P -$

8/24/2016 TX S&S -$

8/23/2016 TX E&P 1,500.0$

8/23/2016 AR S&S 1.0$

8/19/2016 CN E&P -$

8/18/2016 OK E&P 137.0$

8/18/2016

Undisclo

sed E&P 222.0$

8/18/2016

Switzerla

nd S&S 3,150.0$

8/17/2016 Israel E&P 149.0$

8/15/2016 TX E&P 400.0$

8/15/2016 TX E&P 1,625.0$

8/10/2016 TX S&S 218.0$

8/8/2016 OK E&P 4.0$

8/8/2016 TX E&P 980.0$

8/5/2016 TX E&P -$

8/4/2016

NM, TX,

OK E&P 425.0$

8/3/2016 TX E&P 19.5$

8/3/2016 TX E&P 390.0$

Comments

To buy 100% of Shell's record title interest in the Brutus/Glider assets; includes

about 25,000 boe/d of current production

Bought Sugar Land, TX-based Quest Offshore Resources' data and subscriptions

business to become part of Wood Mackenzie

Formed JV to drill and complete certain Eagle Ford Shale wells in TX; covers more

than 1,450 gross acres and working interest will vary between 8% and 14%

Purchased certain construction and maintenance service assets in the Permian

Basin from the Weatherford, TX-based company; includes building and yard in

Midland, TXTo acquire two privately held companies, gaining about 57,000 net acres in the

Delaware Basin in Reeves and Culberson counties, TX, and about 7,000 boe/d of

current net production

To buy certain assets including a permitted and producing wet processing plant,

equipment and related assets, all nearby its Sandtown silica sands deposit in AR.

To acquire all Marquee's shares in a merger to form a company focused on the

Michichi oil fairway in Alberta; includes 2,600 bbl/d of oil production

To Purchase about 18,000 net acres of Scoop and Stack assets primarily in

Canadian and Grady counties in central OK.

EOG Resources Inc.

Clayton William Energy

Inc.

Newfield Exploration

Co.

Continental Resources

Inc.

Pentair

Noble Energy Inc.;

Delek Group Ltd.

Undisclosed

Reliance Energy Inc.

U.S. Silica Holdings Inc.

EnerVest Ltd.

Rock Oil Holdings LLC;

Riverstone Holdings LLC

Undisclosed

Acquirer

Royal Dutch Shell Plc;

Shell Offshore Inc.

Quest Offshore

Resources Inc.

Lonestar Resources US

Inc.

Brazos Rock Inc.Kimmeridge Energy

Management Co.; Arris

Petroleum Corp.; 299

Tutle Holding LLC

Marquee Energy Ltd.Scoop Energy Co. LLC;

American Energy

Partners LP

Reliance Energy Inc.

U.S. Silica Holdings Inc.

EnerVest Ltd.

Rock Oil Holdings LLC; Riverstone Holdings LLC

Undisclosed

EOG Resources Inc.

Clayton William Energy Inc.

Newfield Exploration Co.

Bought assets in more than a dozen separate transactions of noncore natural gas

and liquids-rich properties; includes 45 MMcf/d of natural gas, 3,300 bbl/d of oil

and 3,700 bbl/d of NGL and certain Permian and OK producing assets

Acquired certain rights from the Spraberry and Wolfcamp formations under about

2,500 net acres in Glasscock County, TX, in the Midland Basin

Undisclosed

Brazos Rock Inc.

Kimmeridge Energy Management Co.; Arris Petroleum Corp.; 299 Resources LLC

Tutle Holding LLC

Marquee Energy Ltd.

Scoop Energy Co. LLC; American Energy Partners LP

Continental Resources Inc.

Target

Royal Dutch Shell Plc; Shell Offshore Inc.

Quest Offshore Resources Inc.

Lonestar Resources US Inc.

Pentair

Noble Energy Inc.; Delek Group Ltd.

To buy 80,000 net acres of Williston Basin properties in ND and MT; includes 2,800

boe/d of net production

To purchase Pentair's valves and controls business headquartered in Schaffhausen

in Switzerland with nearly 7,500 employees worldwide

To acquire rights in the Tanin and Karish gas fields offshore Israel; includes

combines gas reserves of 3 Tcf

To acquire 9,140 net acres in Glasscock County, TX at about $43,000 per acre

To acquire 40,000 net acres in the Midland Basin, bringing Concho's position to

150,000 acres

Acquired Sandbox's logistics services, chiefly dealing with the transport of

proppant

Bought operated and nonoperated producing wells and drillable leaseholds in the

Woodford Shale and Mississippi Lime formation in Central OKTo acquire 100% ownership interests in Rock Oil, which holds 24,783 net acres in

Howard County, TX, in the Midland Basin with 4,900 boe/d of net production and

6 Mmboe of PDP reserves

Acquired producing properties in the Southern Midland Basin; includes operations,

10,000 net boe/d of current production and Wolfcamp Shale development

To acquire in separate transactions Eagle Ford Shale and S TX conventional natural

gas assets; includes 12,700 boe/d of current net production, 35% oil

Oil & Gas Upstream Transactions

Source: Capital IQ, Oil & Gas InvestorNote: E&P = Exploration & Production; S&S = Supply & Services; R&M = Refining & Marketing


Armada Intelligence

M&A TransactionsAs of August 31, 2016

11

Announced

Date States Sector

Transaction

Value (MM)

8/3/2016 NM E&P -$

8/3/2016 OK E&P 27.1$

8/3/2016 OK E&P 281.0$

8/2/2016 CO E&P -$

8/1/2016 TX E&P 19.5$

8/1/2016 WV E&P 96.0$

8/1/2016

NM, ND,

MT E&P 172.5$

Statoil ASA Antero Resources Corp.

To purchase nonoperated interests in the WV Marcellus Shale in the Appalachian Basin;

includes about 11,500 acres and 19% average WI.

SM Energy Co. Undisclosed

To buy SE NM waterflood assets and Williston Basin ND and MT assets in two separate

packages; includes 79,000 net acres that produced 3,300 boe/d in 2Q 2016

Bayswater Exploration & Production LLC Extraction Oil & Gas LLC To purchase a portion of the Denver-based company's D-J Basin oil and gas properties.

Undisclosed

Mid-Con Energy Partners

LP; Mid-Con Energy

Properties LLC

To buy bolt-on acreage in the Permian Basin in Nolan County, TX; includes 96% average WI

and operatorship in 41 wells

Undisclosed Jones Energy Inc.

To buy Anadarko Basin assets, 98% HBP, in the TX panhandle in Lipscomb and Ochiltree

counties.

Continental Resources Inc. Undisclosed To buy 29,500 net acres in OK's Scoop Play with 550 boe/d of production

Target Acquirer Comments

Undisclosed WPX Energy Inc.

Purchased 7,800 net acres in the Delaware Basin; includes 425 boe/d of production, 55%

oil, from 16 vertical wells

Oil & Gas Upstream Transactions

Source: Capital IQ, Oil & Gas InvestorNote: E&P = Exploration & Production; S&S = Supply & Services; R&M = Refining & Marketing


Armada Intelligence

M&A Transactions (Cont')As of August 31, 2016

254235

260 242213 200

273 272

151175

228207

178211

252209

100144 144

11680 97

0

2,000

4,000

6,000

0

50

100

150

200

250

300

350

400

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q2

2011 2012 2013 2014 2015 2016

Overall(Vol.)

Oil & Gas(Vol.)

O&G Upstream M&A Transaction (L) Overall M&A Transaction (R)

M&A Closed Transactions Trends

12

About Armada Advisors, LLCArmada Advisors, LLC is an independent financial and strategic advisory firm founded by Trefethen Advisors, serving leading middle-

market public and private corporations, family offices, institutional investors, operating executives and individual business owners.

Our hands-on senior partners have negotiated, structured, and completed more than $8 billion in transactions. Armada’s sector-

focused model enables us to provide our clients with a complete perspective of the micro and macro economic trends affecting

their industry and business, and influencing their complex strategic decisions.

Armada’s collaborative approach consists of developing and executing value-maximizing strategies that are aligned with our clients’

objectives. We offer a full range of financial and strategic advisory services (e.g., M&A; Corporate Finance; Financial Restructuring,

ESOPs), and skilled transaction execution capabilities. Our principals have significant experience in senior housing and have

extensive relationships with industry and capital markets participants. Our focus on value-added research provides our clients with

insight on industry specific and macro issues affecting their business.

This report is for information purposes only and is not intended as an offer or solicitation with respect to any purchase or sale of any security. This report may

contain information provided by third parties. Armada Advisors, LLC and such third parties do not guarantee the accuracy, adequacy, or completeness of such

information and are not responsible for any errors or omissions regardless of the cause or for the results obtained from the use thereof. In no event shall Armada

Advisors, LLC or the third-party information providers be liable for any damages, costs or losses in connection with any use of such information. Reproduction or

distribution of such information is prohibited without prior written consent of the related third party. The opinions presented herein reflect the current judgment of

the authors and are subject to change. Armada Advisors, LLC makes no warranties, expressed or implied, regarding the accuracy of this information or the subjective

opinions expressed by the authors. Armada Advisors, LLC, its officers, directors and partners may at any time have positions in the securities of the companies

discussed herein.

After showing significant declines in July, oil prices bounced off a low of ~$40/barrel in early August rising to

~$49/ barrel during the month only to retreat $43/barrel at the end of August. Those levels were enough to

spark continued increases in rig count activity, as U.S. rigs increased from 463 to 497 during the month. Most

of that increased rig count, not surprisingly, is in the Permian Basin where an estimated 70 rigs have come

online since May and where many think assets can be profitable at $30/barrel. With modest increases in

production, continued increases in oil and refined products inventories and fundamentals that aren’t great

there will likely be continued pressure on prices, but there does seem to be support in the $40 level. That

said, perceived additional threats from Shale production could reinforce the market share defending strategy

of OPEC. In addition, higher inventory across most oil based product categories is continuing to weigh on the

market and raises questions about fundamentals. In the United States, favorable driving patterns helped to

boost demand with passengers driving an estimated 3 trillion miles over the last 12 months leading to gas

consumption peaking, but not enough to impact increasing gasoline inventory. Globally, demand remains

relatively weak with China demand estimated to be down 2% for the year and India only up 4%. There

continues to be an active M&A environment evidenced by the recent announcement of Canadian Pipeline

operator Enbridge agreeing to acquire Houston based, Spectra Energy in all stock deal valued at $28 billion,

representing an 11.5% premium at the time of announcement. On the E&P side, shale driller, EOG Resources

announced a deal to acquire privately held Yates Petroleum for $2.3B, which will extend the EOG presence

into Colorado and Wyoming. While fundamentals could be better and inventories remain high, prices seem to

be supportable at the current levels and most feel that when OPEC meets later this month (September 26th)

that they will manage output in such a way to maintain prices in the $50-$60 range.

Armada Intelligence

Closing ThoughtsAs of August 31, 2016

Oil & GasMarket Monthly Newsletter

M&A Valuation Metrics

13

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