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Featured Inside
MPK Invests in EnergyNet
Market Update: A&D in the Trenches
EnergyNet Community Engagement
Wyoming has Record Government Lease Sale
EnergyNet in the News
quarterlyMARKETPLACE QUARTERLY | Q2 2017
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Strategic Investment by MPK a Major Vote of ConfidenceBy Bill Britain, Chairman, ENCI Holding Company
FROM THE CHAIRMAN
I am excited to announce that MPK Equity Partners of Dallas has made a strategic investment in EnergyNet. Our management team and I view this partnership as a major milestone in the evolution and growth of our company – and we couldn’t be more proud and excited to welcome them to the EnergyNet family.
The MPK principals, Patrick McGee, Ross Perot, Jr. and Doug Kennealey, and their team, are regarded as one of the top investment firms in the nation, and they bring incredible insight, acumen, and connections to EnergyNet. Their investment allows us to accelerate some of the innovations we’ve wanted to bring to our online platform and to invest in some new technology to improve our infrastructure. And most importantly, we will be able to invest more in the human capital side of our business since we are always striving to provide an ever better customer experience.
One thing that hasn’t changed, however, is our competitive solution: to combine cutting edge technology with deep energy industry knowledge to create the most efficient and effective marketplace to buy and sell oil and gas assets.
EnergyNet has steadily grown since we sold the first ever, online oil and gas property in 2000; and over the past few years our growth has accelerated as the complexity, asset value, and client-caliber of the deals we handle increased dramatically. Over the last year, we have had the privilege to facilitate the sale of almost $1 billion in oil and gas properties for our sellers and buyers. Today our clients include majors, large independents, bank trust departments, foundations, universities, and high-net-worth individuals. Additionally, we are the exclusive online provider for the U.S. Bureau of Land Management and seven other state lease agencies to market their oil and gas leases and other minerals using EnergyNet’s auction and sealed bid platforms.
Patrick McGee and Doug Kennealey, managing partners of MPK, made the following observation about EnergyNet when they were conducting their due diligence:
“We believe EnergyNet is extremely well-positioned in the oil and gas marketplace and is experiencing significant momentum, particularly in the larger transaction space. EnergyNet’s platform solves a real need, and we’ve been incredibly impressed with the company’s use of technology and transparent information to expand its reach to serve both government and private customers in negotiated, sealed bids, and auctions for properties ranging in value from $1,000 to in excess of $100 million. Its platform is flexible, scalable, and adds tangible value for customers—that’s incredibly compelling.”
These are interesting times, filled with challenges – not just for EnergyNet, but for the industry as a whole. And while we are excited about EnergyNet’s growth and our future, we are also ever mindful of our past and where we’ve come from. Many of us at EnergyNet have been here since we started, 17 years ago, and we value the deep relationships we’ve built with you, our customers. We sincerely appreciate the trust you’ve placed in us and for that we are ever grateful.
Warmest Regards,
William W. Britain
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A&D in the Trenches:A&D Trends from EnergyNet’s Point of ViewBy Chris Atherton, President, EnergyNet.com, Inc.
MARKET UPDATE
EnergyNet’s mission is to bring exposure, competition, reliability, and liquidity to the upstream oil and gas A&D market. We specialize in helping our clients divest oil and gas properties that are valued between $100,000 and more than $100 million. EnergyNet’s platform offers a structured, professional, and fair sales process to maximize value for oil and gas properties and interests. Our deep market knowledge from advising, facilitating, negotiating, and closing hundreds of transactions in every US basin, coupled with our frequent interaction with high-caliber Sellers and 20,000+ Buyers, gives us a unique perspective on acquisition and divestment trends.
Here are the top five trends as we see them:
• Private equity sponsored management teams have made a mass exodus from the Permian Basin during the past 18 months. Some who have sold out of their positions in the Midland and Delaware Basins include: Panther, Silver Hill, QStar, Silverback, CP Exploration II, Ameredev, Bold Energy, Double Eagle, Fortuna, and Black Mountain. More than $22 billion in Permian deals have been announced the past 18 months with buyers mainly being publicly traded companies.
• The vast majority of Chapter 11 restructuring work caused by the severe commodity price down turn beginning in 2014 is concluding. Samson, Ultra Petroleum, Halcon Resources, Goodrich, Sandridge, Samson, Linn, Energy XXI and Chaparral have all reemerged and are getting back to business, taking an increasingly active role in A&D markets.
• The major oil companies and large-cap independents are conducting large-scale portfolio rationalizations that will likely continue into the end of 2018. Decisions were made in 2015 and 2016 to divest assets that would not make sense for these large entities to own at $20 or $120/bbl oil. Capital is being directed to the most impactful assets; those that don’t meet the criteria are candidates for divestment. After the land grab of the past 36 months, basin dominant operators are beginning to shed their tier 2 or tier 3 acreage positions, leading to enormous buying opportunities for others.
• While the Permian Basin and the SCOOP/STACK plays seem to dominate headlines, a wide-ranging set of investment strategies continues to exist. In order to obtain investment capital, companies must commit to specific strategies they believe will work and in which have expertise. In EnergyNet’s marketspace we deal with buyers that are laser-focused on varied areas and properties such as: Powder River Basin, DJ Basin, Kansas, South Texas, East Texas, Mississippi, Producing Minerals, Non-Op Working Interests, Horizontal San Andres, Waterfloods, and every other category imaginable.
• Royalty and Mineral A&D is vying for a bigger audience and a bigger stage. Publicly-traded royalty companies are becoming more prevalent. Viper, Blackstone, Prairie Sky, and Kimbell are publicly traded royalty companies, and there are likely more to come. A&D activity in the mineral and royalty space has historically always been active. A high volume of deals trade hands each year, but the vast majority of these deals – 99 percent that transact – are individually valued at less than $20 million. By their very nature, there are thousands of owners of mineral and royalty interests and the value of each owner’s interest is relatively low. There are hundreds of companies that serve as royalty aggregators but consolidating royalty or mineral interests is effectively the equivalent to consolidating the blades of grass in your front lawn. First, you typically have to cut one blade of grass at time because you have so many unique owners, and second, it seems more blades of grass are always sprouting up.
EnergyNet’s pipeline of new business coming to the market is robust and we fully expect 2017 and 2018 to be extremely active where buyers will have great opportunities to acquire solid, company-making assets.
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EnergyNet Hosts RecordWyoming SaleBy John Munroe, VP Engineering & Government Lease Sales
GOVERNMENT LEASE SALES UPDATE
EnergyNet hosted the Wyoming Office of State Lands and Investments sale on March 15, 2017, consisting of 197 parcels that covered 85,833.37 acres. This marked the first time the state of Wyoming had posted their sales through EnergyNet for nominated parcels (EnergyNet has hosted two of their over-the-counter sales).
The sale was a great success, selling 100 percent of the parcels offered and producing almost $30 million in revenue for the state – the most Wyoming has made in an oil and gas lease sale since 2011. This sale also brought a record number of 78 registered bidders. Proceeds from the sale benefited Wyoming’s Common School Fund, Public Buildings at the Capitol, and the Farm Loan Fund.
“This is a big win for the State of Wyoming and the state’s trust beneficiaries,” said Bridget Hill, Director of the Office of State Lands and Investments. “We’ve seen other states and the BLM benefit by holding their oil and gas lease auctions online, we’re now experiencing that benefit in a big way, especially for [Wyoming’s] K-12 education funding.”
EnergyNet conducted 13 state and federal lease sales in the first quarter, and have scheduled sales for the following agencies for this quarter: New Mexico State Land Office, Colorado State Land Board, North Dakota Department of Trust Lands, Utah School and Institutional Trust Lands Administration, as well as the Bureau of Land Management State Offices of Colorado, Eastern States, New Mexico, Montana, Utah, and Wyoming.
For more information on EnergyNet’s Government Lease offerings, the sale calendar, and information on the registration process, go to energynet.com/govt_listing.pl or contact one of the Government Lease Sale team members:
EnergyNet is proud to have represented these companies and agencies during the 1st Quarter.
PROUD PARTNERS
Trust Lands AdministrationState of Utah School and Institutional Trust Lands Administration
JOHN S. MUNROEVice President
(832) [email protected]
GUS RIVEROManager
(806) [email protected]
BRANDON SAVAGEAssistant Manager
(806) [email protected]
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ENERGYNET GIVES BACK
Sellers: 112Closing days: 33Cumulative sales: $214,798,212.50
Relevant, Current Experience in All U.S. Basins
A Breakdown of EnergyNet’s Operations for 1st Quarter
Q1 PERFORMANCE
PROPERTIESSOLDBYREGIONANDTYPERegion COMBO OPWI WI ROY ORRI GOVT MIN Leasehold TOTAL
Ark-La-Tex 6 13 15 105 17 7 17 1 163Appalachians 7 2 5 13 2 15 29 3 44GulfCoast 9 15 24 45 11 20 13 3 124
MidContinent 47 34 74 118 18 1 74 9 292PermianBasin 14 14 29 43 2 215 7 6 317WesternUS 18 4 45 25 8 951 46 8 1051
EN’s Permian Basin manager gives backthrough domestic violence awareness
EnergyNet staff are giving back in big ways to the communities they serve. Lindsay Ballard, manager of Permian Basin, recently participated in the annual Midland, TX charity fashion show benefiting Midland Safe Place of the Permian Basin. A 37 year-old 501(c)3, Safe Place works to break the cycle of domestic abuse and family violence by empowering individuals to make safe and healthy choices through awareness, counseling, advocacy, and shelter, while promoting hope, healing, and dignity.
Lindsay has participated in the fashion show for two years and is committed to supporting survivors of domestic abuse and family violence.
House serves on foundation for at-risk youth
Ethan House, Vice President of Business Development for Mid Continent & TX Panhandle, is a member of the Board of Directors and serves on the Grant Committee for the Wes Welker Foundation, whose mission is
“to influence at-risk youth by encouraging their full potential through athletics and positive role models.” As a part of this role with the foundation, House visits various Oklahoma City Public Schools, assessing their athletic needs and youth programs. The foundation recently approved more than $81,000 in grants for the spring cycle.
“It is an honor to work with Wes and this board,” House said. “Our schools have very lean budgets and they need us. There is nothing more meaningful than returning to a school we’ve previously helped and seeing the increase in participation and pride, by not only the students, but the communities surrounding them.”
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What Others Are Saying about EnergyNet This Quarter
IN THE NEWS
DALLAS BUSINESS JOURNALWhy investment firm tied to Perot Jr. bet on online land auctioneerBy Jon Prior, published Monday, April 3, 2017
EnergyNet started auctioning parcels from these corporations in the neighborhood of $1 million, and today they have done listings north of $100 million, said MPK Managing Partner Doug Kennealey.
“It was among some of the best customer calls that we have ever done in our due diligence,” Kennealey said from the firm’s conference room in Perot Jr.’s new office building on Turtle Creek. “They just have a better mouse trap.”
BLOOMBERG BUSINESSWEEKWhy You Need the Internet to DrillWebsite EnergyNet is the leading hub for federal land leasesBy Mya Frazier, published Thursday, Feb. 16, 2017
“… and this year only two of its [the BLM’s] 26 auctions will be held in person. The rest have been contracted to EnergyNet, a privately held company in Amarillo, Texas, that runs the country’s largest auction site for oil and gas properties. Obama’s BLM gave EnergyNet a five-year exclusive to manage the bureau’s online auctions, and the company has since made similar deals with state agencies in Colorado, New Mexico, North Dakota, Texas, Utah, and Wyoming.”
AMARILLO GLOBE-NEWSRoss Perot Jr.’s firm invests in Amarillo online land auction companyBy Ben Egel, published Sunday, March 26, 2017
“Relative to traditional auctions in hotel ballrooms or where you hire an investment bank to sell your assets, their [EnergyNet’s] platform is much more efficient, much more transparent and results in much better outcomes for sellers,” MPK co-founder Doug Kennealey said. “They can get a property to market much more quickly, which is important in oil and gas because you often have to time the market just right.”
THE OKLAHOMANOnline marketplace fuels oil-field asset sales in OklahomaBy Adam Wilmoth, published Friday, April 7, 2017
As technology continues to change the oil and natural gas industry, Ethan House is helping bring the internet of things to oil-field asset sales.
Vice president of business development at EnergyNet.com Inc., House helps larger companies sell off unwanted assets that can become a key part of smaller companies or those with a different focus.
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Events You Won’t Want to Miss in Q2
CALENDAR UPDATE
MAY 4 OIPA WildcattersOklahoma City, OKMAY 10 IPAA/TIPRO Leaders in Industry LuncheonHouston, TXMAY 15 Houston Wildcatters Honoring Cimarex EnergyHouston, TXMAY 18 SIPES LuncheonHouston, TXMAY 19 ADAM HoustonHouston, TXMAY 23 ADAM TulsaTulsa, OKMAY 24 SPE Business Development MeetingHouston, TX
JUNE 1 ADAM Energy Forum LuncheonDallas, TXJUNE 2 OIPA Annual MeetingLas Colinas, TXJUNE 8 CIPA Annual MeetingMonterey, CAJUNE 14 IPAA/TIPRO Leaders in Industry LuncheonHouston, TXJUNE 15 SIPES LuncheonHouston, TXJUNE 16 ADAM HoustonHouston, TXJUNE 21-23 IPAA Midyear MeetingLaguna Niguel, CAJUNE 27 ADAM OKCOklahoma City, OKJUNE 28 SPE Business Development MeetingHouston, TX
May June JulyMAY
May June JulyJUNE
JULY 9-13 WSLCA Summer ConferenceAnchorage, AKJULY 12 IPAA/TIPRO Leaders in Industry LuncheonHouston, TXJULY 13 ADAM Energy Forum LuncheonDallas, TXJULY 20 SIPES LuncheonHouston, TXJULY 25 ADAM TulsaTulsa, OK
May June JulyJULY
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