Vegas Energy Conference Recap v2 Web

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    CONFERENCE RECAP

    THIRTEENTH ANNUAL

    Spring 2013

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    SIMMONS & COMPANY INTERNATIONAL

    THIRTEENTH ANNUAL ENERGY CONFERENCE PANEL PARTICIPANTS

    E&P PERSPECTIVES:

    LARGE CAP

    Ernie Leyendecker

    Vice President, Exploraon

    Anadarko Petroleum Corporaon

    John Christmann

    Region Vice President

    Apache Corporaon

    William Thomas

    President

    EOG Resources

    Tim Dove

    President & CEO

    Pioneer Natural Resources

    CAPITAL EQUIPMENT

    Chuck Sledge

    Senior Vice President,

    Finance & CFO

    Cameron Internaonal

    Corporaon

    John Gremp

    Chairman & CEO

    FMC Technologies

    Jeremy Thigpen

    CFO

    Naonal Oilwell Varco

    E&P PERSPECTIVES:

    NATURAL GAS

    Dan Dinges

    Chairman, President & CEOCabot Oil & Gas Corporaon

    Ray Walker

    COO & Senior Vice President

    Range Resources

    Steve Mueller

    President & CEO

    Southwestern Energy

    MIDSTREAM/MLP

    Randy Fowler

    Execuve Vice President & CFO

    Enterprise Products Partners

    Park Shaper

    President

    Kinder Morgan, Inc.

    Terry Spencer

    President

    ONEOK Partners

    LARGE CAP SERVICE

    Andy ODonnell

    Vice President,

    Oce Of The CEO

    Baker Hughes Incorporated

    Tim Probert

    President, Strategy &

    Corporate Developement

    Halliburton Company

    Bernard Duroc-Danner

    Chairman, President & CEO

    Weatherford Internaonal

    MID CAP SERVICE

    Ernesto Bausta III

    CFO

    CARBO Ceramics

    David Demshur

    Chairman, President & CEO

    Core Laboratories

    Cindy Taylor

    President & CEO

    Oil States Internaonal

    Dale Dusterho

    CEO

    Trican Well Service

    SMALL CAP SERVICE

    Josh Comstock

    CEO

    C&J Energy Services

    Wm. Stacy Locke

    President & CEO

    Pioneer Energy Services

    Bryan Shinn

    President & CEO

    U.S. Silica Holdings

    MID CAP MAJORS: NAMUNCONVENTIONAL/GLOBAL EXPLORATION

    Howard Thill

    Vice President, Investor Relaons

    & Public Aairs

    Marathon Oil Corporaon

    Kevin Fitzgerald

    Execuve Vice President & CFO

    Murphy Oil Corporaon

    Helge Haldorsen

    Vice President, Strategy &

    Business Development North

    America

    Statoil ASA

    OFFSHORE DRILLERS

    Mark Mey

    Senior Vice President, CFO

    Atwood Oceanics

    Larry DickersonPresident & CFO

    Diamond Oshore Drilling

    John Rynd

    President & CEO

    Hercules Oshore

    Simon Johnson

    Vice President, Markeng &

    Contracts

    Noble Corporaon

    Mark Keller

    Execuve Vice President,Business Development

    Rowan Companies

    REFINING

    Donald Templin

    Senior Vice President, CFO

    Marathon Petroleum

    Tim Taylor

    Execuve Vice President,

    Commercial, Markeng,

    Transporaon & Business

    Development

    Phillips 66

    Dan Romasko

    Execuve Vice President,

    Operaons

    Tesoro Corporaon

    Bill Klesse

    CEO, Chairman Of The Boar

    Valero Energy Coroporao

    E&P PERSPECTIVES:MID CAP

    Joe Wright

    Senior Vice President, COO

    Concho Resources

    Lee Boothby

    Chairman, President & CEO

    Neweld Exploraon Comp

    Taylor Reid

    Execuve Vice President, CO

    Oasis Petroleum

    Jim Flores

    Chairman, President & CEO

    Plains Exploraon & Produ

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    SIMMONS & COMPANY INTERNATIONAL

    THIRTEENTH ANNUAL ENERGY CONFERENCE OVERVIEW

    At Simmons 13th annual Energy Conference in Las Vegas in February,

    39 CEOs and other top execuves across the energy industry met withinvestors, and tackled some of the most pressing issues facing the industry

    today in panel discussions. Among the most signicant takeaways were:

    While some companies in the service and midstream segments see

    potenal for consolidaon acvity, most panelistsparcularly in

    exploraon and produconare put o by what they consider to be

    high asset valuaons.

    The big queson of the conference was about North American

    onshore oil producon and whether or when the astounding growth

    of the past few years will start to decelerate.

    Another big queson was about when the decline in natural gas-

    directed rig count will oset associated gas producon from oil plays,

    catalyzing natural gas pricing improvement.

    The renaissance in North American oil & gas producon is spreading

    the wealth across industry segments as rising domesc supplies bring

    new vitality into the midstream and downstream markets.

    The outlook for oil service companies appears to be mixed, with some

    panelists reporng pockets of strength while othersand many of

    their E&P clientssaw pricing in selected areas remaining so.

    Excitement over new nds and producon prospects has shied

    decidedly from North American onshore sites to the Gulf of Mexico

    and beyond. Oshore acvity has picked up in many places around

    the globe, although acvity in Brazil remains somewhat uncertain.

    Comments from panel parcipants were frank, and the discussions

    revealed dierences in opinion and outlook. The following are some of

    the insights from execuves, in their own words.

    S I M M O NS & CO M P A NY I NT E R N A T I O NA L S

    T H I R T E E NT H A NNU A L E NE R GY CO NFE R E NCE R E CA P 1

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    Panelists, with a few excepons, were unenthusiasc about current M&A

    opportunies, cing high valuaons. Most companies will focus this year ongrowing their businesses and increasing producon from core assets--wheth

    those assets are new drillships or Permian acreage or pipelines. Buying

    earnings right now is a heck of a lot more expensive than building them, said

    Terry Spencer, President of ONEOK Partnersin the midstream space. At 12

    13x market mulples, we like the grassroots investments; those prices make

    easy for us to decide where to deploy our capital.

    Helge Haldorsen, Vice President of North American Strategy and Business

    Development for Statoil ASA, would like to be a buyer in the U.S. but is held

    back by the high prices. Our strategy is to get bigger so we can be doing thi

    for 40 years, he said. We have our smallest presence in the Eagle Ford, and

    if the price is right will increase our presence, but prices in the market are ve

    high. Hw Thll, Mth Ol Cps Vc Pst f Ivst

    Rls, agrees. We do connue to look at opportunies to do bolt-on

    acquisions, but the market is very expensive today, and theres not a lot for

    sale, quite frankly, he said. The Eagle Ford has just a few large companies

    operang there, while the Bakken is more splintered with a lot of smaller

    players. We expected more consolidaon there by this point, but over the ye

    as we got comfortable with the price level, it would run away from us again.

    On the North American service side, lower rig counts and some low pricing

    might suggest there are opportunies for consolidaon, but asset prices are

    holding buyers back. We are out of the M&A market, said Dl Dsth

    CEO of Trican Well Service. If we were to do any M&A in the U.S., we

    would want to do it under asset value, and we dont see any opportunies

    out there right now. Others see selected opportunies. We are looking at

    diversicaon of our exisng service lines, said Josh Comstock, CEO of C&J

    Energy Services. We want to create higher diversicaon of our oerings a

    see some opportunies. Taylor Reid, EVP and COO of Oasis Petroleum, thi

    consolidaon would benet the North American E&P segment as well. Whe

    you look at the shale plays, as people transion to pad and to drilling mulple

    wells, the complexity of those operaons increases signicantly, he explaine

    To gain the scale and ability to take advantage of those opportuniesit

    makes sense to consolidate, its just a queson of whether you can make the

    numbers work.

    PRICEY ASSETS SUBDUE M&A INTEREST

    2S I M M O NS & CO M P A NY I NT E R NA T I O NA L S

    T H I R T E E NT H A NNU A L E NE R GY CO NFE R E NCE R E CA P

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    Companies are going to the markets

    o sell paral interests in selected

    projects in an eort to boost market

    valuaons of what they feel are

    under-recognized assets in their

    porolios. Marathon announced in

    October that it was considering selling

    an interest in its Canadian oil sands

    project. If we do sell, we would keep

    an exposure of 10% or more, said

    Howard Thill. That property has

    great potenal over the next 20-40

    years for development, so it is not like

    we are exing the business. Selling

    an interest would put a marker out

    here. The full value of our oil sands

    project is not reected in our share

    price. Marathon is doing the same

    hing with its Gulf of Mexico interests,owering its interest in prospects such

    as Madagascar from 100% to 30-

    50%. We are doing that to manage

    nancial and polical risk, explained

    Thill. Those properes are all part

    of our larger porolio, and it is part of

    whats dierent now about Marathon: