The M&A market for renewables assets gained momentum over the past decade (Figure 1), demonstrating increased interest that we attribute to cost declines, stricter government policy and growing societal support. Recent high-water mark deal multiples of $8-$10 million/megawatt (MW) observed in the North Sea raise the question of whether renewable asset valuations are floating in a bubble.
Improvements in asset performance and declining costs in the renewables space are the same characteristics that drove a “hype curve” in shale plays like the Delaware Basin in Texas and New Mexico, which at its peak saw a fivefold appreciation in land value as buyers grew comfortable with increasingly aggressive M&A multiples. But our analysis of ~$130 billion of solar and wind transactions since 2010 revealed a surprisingly stable average multiple of ~$3.5 million/MW. Since most transactions occurred during or after construction once the distribution of future cash flows was established, little room was left for asset value speculation.
While the North Sea’s $8-$10 million/MW benchmark may seem exuberant at first, we believe it is justifiable based on certain legacy programs that set high prices to encourage the development of power generation projects from renewable energy sources. Our analysis of the levelized cost of energy, which measures the cost to generate power over a plant’s lifetime, for U.K. wind farms alongside policy-set pricing showed $100/megawatt hour spreads through the back half of the last decade – bringing multiples of $10 million/MW into the money. However, this price-setting mechanism has since been discontinued in favor of a competitive bidding process, which we believe will eliminate the spread and cause M&A multiples in the region to converge towards $3 million/MW – on par with industry average. Click here to learn more about Enverus’ Intelligence solutions.
FIGURE 1 | Renewable Asset Generation Deals Over the Past Decade
AUSTIN, Texas (June 10, 2021) — Enverus, a global leader in energy data analytics and SaaS technology, today announced the completion of its acquisition by Hellman & Friedman (H&F), a premier global private equity firm. The transaction was previously announced on April 13, 2021, and values Enverus at $4.25 billion, including the assumption of debt. Genstar Capital (Genstar), which had been Enverus’ majority owner since 2018, will continue to hold a significant minority stake in the company.
The closing of this transaction represents a significant milestone for Enverus — a data analytics and SaaS technology company which provides market-leading software and analytics solutions for companies that serve the energy industry. Enverus empowers companies to transform traditional decision making by accessing innovative cloud technology, predictive analytics, artificial intelligence and machine learning and industry-leading intellectual capital. The company has more than 6,000 customers across the entire energy mix, including 21 of the Top 25 Global Energy Companies, from E&P and midstream to power and utilities companies.
“We’re very excited to complete this transaction and begin working closely with the H&F team,” said Jeff Hughes, CEO of Enverus. “H&F has an impressive track record in the SaaS space and this partnership will allow us to benefit from their significant expertise, experience and resources. Their investment will help accelerate our growth trajectory, and drive continued innovation, as we help our oil and gas customers leverage predictive analytics, artificial intelligence and machine-learning capabilities, while simultaneously expanding into renewable energy, power and ESG capabilities.”
“H&F has followed Enverus for years and our investment is a clear vote of confidence in its industry-leading product, strong team and incredible growth potential in a market that is being revolutionized by technology,” said Ben Farkas, partner at H&F. “We’re thrilled to partner with the team at Enverus as they continue to innovate and bring advanced SaaS solutions to energy customers around the world.”
About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Hellman & Friedman
Hellman & Friedman is a preeminent global private equity firm with a distinctive investment approach focused on large-scale equity investments in high quality growth businesses. H&F seeks to partner with world-class management teams where its deep sector expertise, long-term orientation and collaborative partnership approach enable companies to flourish. H&F targets outstanding businesses in select sectors including software & technology, financial services, healthcare, consumer & retail, and other business services. Since its founding in 1984, H&F has invested in over 100 companies. The firm is currently investing its tenth fund, with over $23 billion of committed capital, and has over $70 billion in assets under management as of March 31, 2021. Learn more about H&F’s defining investment philosophy and approach to sustainable outcomes at www.hf.com.
About Genstar Capital Genstar Capital is a leading private equity firm that has been actively investing in high quality companies for over 30 years. Based in San Francisco, Genstar works in partnership with its management teams and its network of strategic advisors to transform its portfolio companies into industry-leading businesses. Together with Genstar X and all active funds, Genstar currently has approximately $33 billion of assets under management and targets investments focused on targeted segments of the financial services, healthcare, industrials and software industries.
Access to the right commodity market data at the right time is key to the success of traders, quants, risk managers and back-office professionals. Enverus’ MarketView APIs provides just that.
While many of our competitors focus on front-end solutions, MarketView also offers an API to help deliver the market data needed by the top global energy and commodity trading firms.
Let’s take a look at how this solution can have a significant impact on your business:
Data overload: Do you receive a lot of data from various sources in multiple formats? MarketView can aggregate your various data sources, putting them in a common format and distributing them to your downstream system of choice.
Duplication of efforts: Need access to MarketView data outside MarketView ExcelTools or MarketView Desktop? Say goodbye to the days of worrying about potential errors from manually copying and pasting data.
Automate data input: MarketView APIs help automate data input, eliminating the need to manually feed data to multiple systems, such as an ETRM or ERP.
What type of users can benefit from MarketView APIs?
Automating and improving the way data is shared across a company benefits a variety of types of users. A trader or analyst might be running their own model to calculate prices daily, or even multiple times during the day. An API allows data to be updated with the click of a button.
For risk managers, the ability to track mark-to-market and value-at-risk is integral to success. An API sends data directly to the ETRM system, providing instant access to the analysis they need.
Quants might run a model in Python to do price forecasting or calculations. An API could automate the process of sharing data between MarketView and Python models.
In the back office, professionals create invoices or confirmations daily. These documents require end-of-day prices, making an API the perfect tool for this use case.
Increase efficiency and reduce opportunities for error
APIs have the power to increase your company’s operational efficiency and reduce the chances for error. With MarketView APIs running automatically, you can further streamline manual tasks, enabling employees to spend less time on repetitive, manual tasks and focus on value-add opportunities.
With automation, trading firms can smoothly start and finalize end-of-day processes. This reduces time-to-market because data is where it needs to be and can be easily updated. This also gives commodity traders access to a single source of truth. When everything comes out of MarketView through the same channels, using the same API, it is guaranteed the data will be the same at all destinations.
To request a free trial of MarketView APIs, click here.
To read our white paper showing how commodity traders use advanced analytics like machine learning and AI, click here.
The evolution of an energy company’s environmental, social and governance (ESG) profile demonstrates the tremendous power of capital markets. In just a few years, ESG moved from a footnote on public disclosure to the forefront of investment decisions and operators’ corporate strategies, a change largely propelled by investors rather than governments.
Driving the discussion are institutes like the Principles for Responsible Investment (PRI). Nearly 3,000 firms that manage more than $100 trillion in assets under management back the PRI, a U.N.-supported initiative stating firms will incorporate ESG issues into investment analysis and decision-making processes. This does not mean the firms will base investments solely on ESG performance, but they will consider ESG aspects alongside their traditional processes. Our discussions with investors show that ESG is becoming another pillar of the decision-making process, along with asset quality and financial performance.
Why? Investors are using a company’s ESG profile to predict its resiliency to future changes. If you know how an executive team is incentivized (governance), you can properly model how the company will react to certain shocks. Quantifying a producer’s greenhouse gas footprint (environmental) will help measure how exposed it is to future regulatory changes. Analyzing a company’s demographic profile (social) can indicate the diversity of its thought process.
The challenge the market faces is that analyzing a company’s ESG profile is largely new and it is difficult to access trusted data. The market is ahead of regulation on this one – there are no generally accepted accounting principles that companies must adhere to. Investors tell companies that ESG will be factored into decisions and companies respond by voluntarily disclosing information, typically at their discretion. It is hard to cut through the smoke and really understand how two companies compare. In parallel, corporate clients position themselves as industry leaders and work to understand the ESG data landscape to ensure they set the right policies to appear favorable relative to peers.
What is Enverus’ solution?
Realizing the need emerging in our client base for integrated, normalized, quantitative data on the ESG performance of energy companies, we built Enverus ESG™ Analytics.
Enverus ESG™ Analytics is the energy industry reference for corporate ESG, providing full visibility into companies’ rankings, how they compare among their peers, and who and what are the most environmentally responsible and investible opportunities in the space.
This solution is delivered in the Prism platform and saves time by eliminating in-house data collection and providing fast analysis and benchmarking tools. The product casts a wide net, collecting the best available energy-related ESG data and distilling it down into an easy-to-digest, transparent format.
Despite reduced capital spending in the Canadian oil sands since 2015, production grew from 2.4 MMbbl/d in January 2015 to 3.6 MMbbl/d in December 2020 (Figure 1).
Our monthly oil sands forecast individually models 48 projects by assessing a company’s near-term guidance, development plan, turnaround schedule, blending patterns and activity data from Prism. The detailed analysis enables forecasts on inventory levels, prices for different types of crude (heavy oil sells less for than light) and demand for condensate, used to blend heavy oil in pipelines for better flow.
Until egress constraints become a thing of the past (Figure 2), oil sands production and pipeline capacity forecasting is critical with respect to the differential between Western Canada Select, a key marker for Canadian oil production, and West Texas Intermediate, the benchmark for U.S. futures. Armed with the right information, clients can anticipate price blowouts between the various grades of oil, such as the one in 2018 where the differential widened to -US$46/bbl.
Each month Enverus clients have access to an updated forecast allowing them to make decisions about operations and investments with this actionable insight.
FIGURE 1 | Oil Sands Base Production Forecast
FIGURE 2 | Heavy Oil Stack and Pipeline Takeaway Capacity
Krishnan Karuppaiah is lead functional and solutions consultant at Principia Consulting Pte. Ltd.
In this week’s “My Career in Energy,” we meet Krishnan and learn about his first job in energy, where he thinks the industry is heading, and what excites him about his current role.
What was your first job?
Financial engineer in a consulting firm specializing in banking trading and treasury systems.
What was your first job in energy? I started my career in the energy industry when I joined Caltex Singapore as a middle office risk analyst. At that time, Caltex was building its middle office team and I was invited by my ex-manager from my first job to join his team. I have never looked back since.
What is your current role? As the lead principal, I provide consultancy services to clients from the energy and commodity sector, as they migrate to a CTRM platform. This involves working with different stakeholders, from senior management to users from the front, mid and back offices and system admin.
In the area of business development, I work closely with my managing director to identify potential solutions to prospective clients, create proof of concept and engage with potential vendors to demonstrate these solutions as part of the vendor selection process.
Who is your inspiration at work? My queen and two lovely children.
What is the first thing you do when you start work in the morning? I pray and seek blessings for a productive day with the client I am engaged with.
What would you be doing if you weren’t in this career? My dream was to be a professional soccer player but that ended as a dream — with a big beer belly now.
How do you relax? I play soccer and badminton with my friends and run and cycle with my kids.
What was your favorite school subject and why? Mathematics as it is governed by logic. I was good at it early on and stuck to it.
What advice would you give someone entering the energy industry today?
The key is to be willing to learn and take ownership of the tasks that have been assigned to you, without any apprehension. It doesn’t matter if you do not have prior knowledge, as that can be picked up along the way.
What do you think the energy industry will look like in 10 years? Sustainability is the buzzword of the century. There is a clear shift toward green solutions — clean fuels, solar power and electric-driven transportation systems.
What book has helped you most at work? I don’t read many books, but the one book that sticks to my mind is “Tuesdays with Morrie” by Mitch Albom.
If you could travel back in time 10 years, would you do anything differently? I don’t typically look back at the paths that I have chosen. But what I would really love to do is to educate clients on the importance of investing time and effort in selecting a solid, scalable system that best fits their needs and can withstand the test of time. I have seen some companies change numerous systems over the years due to incompatibility issues as their business evolves.
I would also like to create more risk analytical and reporting tools which are often lacking in a CTRM system. The system should be intelligent enough to support a company’s operations, without the need for external BI tools.
What excites you about your job? Problem solving, people management and dealing with clients and their varying moods daily. Some of my past clients have become my soccer or drinking buddies — something which I am thankful for.
Want to connect with Krishnan? You can find him on LinkedIn here.
Interested in sharing your career in energy or contributing to the “Enverus Innovator” blog? Fill out the form here.
Austin, Texas (June 2, 2021) — Enverus, the leading global energy data analytics and SaaS technology company, released today its initial suite of solutions for the Power & Renewables market. Built on a foundation of the most comprehensive data and analytics capabilities available, these products enable project and infrastructure tracking with full source documents, investment benchmarking, load, generation, congestion, price forecasts, valuations and more.
Until now, tracking, trading, interpreting, valuing and predicting the rapid change occurring in the Power & Renewables market was a challenge because of the lack of clean, high-quality data and siloed products. With Enverus’ solution suite for Power & Renewables, companies have the technology to work from the same datasets and benchmark the entire energy mix in a single platform. The result is significant time savings and better capital allocation decisions, while maintaining a clearer, more holistic picture of the industry.
“Governments, industry and societies all over the world continue to press for reduced carbon emissions and increased renewable energy use. To make this a reality, they need accurate and reliable data that helps them make rational, actionable decisions,” said Manuj Nikhanj, president of Enverus. “It is more important than ever to quickly and confidently respond with unbiased data-driven analysis and world-class research.”
Enverus has invested both organically and through acquisitions to create an unprecedented, comprehensive Power & Renewables offering that parallels our world-class offerings in oil and gas. Our initial platform release includes more than 27,000 solar projects, 15,000 wind projects, 3,000 battery/storage locations, 8,500 smart grid inputs, 13,000 transmission projects, 43,500 substations and 9,000 companies, all inside a single custom-built platform. Whether a user is seeking historical data to assess the profitability of a new power project opportunity, or they are a seasoned power trader utilizing various financial instruments, Enverus supplies essential data and analytics covering the Power & Renewables space.
In addition to our platform, Enverus is releasing its Intelligence suite that includes daily, weekly and monthly reports that help traders, investors and analysts make critical investment and trading decisions. By leveraging our hundreds of research analysts, data scientists, engineers, traders and economists, we will continue to build an offering that covers commercial, asset and macro insights in the Power & Renewables space that are data driven and unmatched by anyone in the industry.
Enverus’ December 2017 acquisition of Pattern Recognition Technology (PRT), a 25-year-old business, paved the way for short-term power demand and price forecasts to the electric, gas, solar and wind markets. In March 2021, the acquisition of Energy Acuity increased the company’s view into electrification, grid demands and renewable energy and the massive growth in power generation and power delivery market data. As investment into a growing Power & Renewables market accelerates so has Enverus’ coverage of power market data.
About Enverus Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Enverus is a portfolio company of Genstar Capital. Learn more at Enverus.com.
Oil and gas operators are having a decent year so far, price-wise, with WTI lately hovering near $70/bbl. Who could imagine prices were nearly $100 lower in April 2020?
Despite the healthier margins for operators, the lessons learned from 2020’s dramatic decline in oil prices will not be forgotten. Oil and gas operators continue to be more vigilant with spending and cost management.
Rising oil prices translate to rising fuel costs
Depending on the size of the operator, fuel costs can add up to a $25 million to $150 million spend category. Fuel costs are rising this year in conjunction with stronger oil prices, so operators will continue to look for ways to ensure no overspending is overlooked.
The way that suppliers charge operators for fuel costs is improving. Five years ago, fuel costs were “all-inclusive” supplier day rates, giving operators little control or visibility into fuel-specific costs needed to manage drilling and completions.
Today, fuel costs are “split,” giving operators improved spending control. Despite this improvement, Enverus estimates that operators continue to overspend by 3% on fuel, mostly due to the inability to audit the specifics of fuel invoices.
Click below for access to a complimentary trial of MarketView with OPIS rack pricing data!
In order to recover the 3%, operators need to effectively:
Automate fuel price entry.
Validate transportation charges.
Audit historical fuel and transportation charges.
Today, we’re going to dive into the first step: automating fuel prices based on OPIS rack rates.
Take advantage of Enverus’ long-lasting partnership with OPIS
OPIS, the Oil Price Information Service, is the go-to fuel rack price for U.S.-based fuel suppliers. Enverus has supplied its trusted rack prices to customers via the MarketView platform for 20 years. The visibility gained with using MarketView enables operators the transparency that they crave.
Utilize the OPIS index for price discovery and that all-important look into the market for assurance that you are being invoiced properly.
Looking at NYMEX only does not bring the full picture and doesn’t tell the complete story — you must look at rack pricing assessments from market experts.
Verify your contracts in real-time using our MarketView ExcelTools add-in.
FIGURE 1 | Track the OPIS rack prices that matter most to you with MarketView Desktop.
With MarketView, finance and accounting professionals can receive OPIS rack pricing and other essential energy market indices in real-time. The platform also allows users to automatically feed OPIS pricing into their daily workflow. Even in Excel, users can automatically pull the day’s rack prices with confidence and ease. The lightweight software provides robust price data on the go — whether users are working from home or back in the office, accessing OPIS pricing is simplified with MarketView.
Receive complimentary access to OPIS rack price data
For the first time ever, our partners at OPIS are working together with us to offer a complimentary trial of OPIS data within the MarketView platform. We are excited to extend this offer to you! Please fill in the form here to express your interest and set up your trial.
Within the Haynesville play in east Texas and Louisiana, energy companies target two stacked intervals — the Haynesville and the slightly shallower Middle Bossier. Historically, operators only target a single zone in a development or add one well testing the other zone. However, we recently identified a few larger-scale developments involving four to six wells across the two intervals (Figure 1). The spacing configurations vary between these developments, with some designs directly stacking wells and other designs stagger-stacking wells. Horizontal spacing varies from three to five wells per section between laterals in both designs, and vertical separation between intervals also varies across the play.
With only a few examples of larger-scale, two-zone development in the Haynesville play, there is uncertainty around optimal spacing and well configuration that can only be resolved with more frequent larger-scale development. View our latest Haynesville Play Fundamentals report to dive deeper into this topic and see our view on the potential for stacked pay development within the Haynesville play.
FIGURE 1 | Spacing Patterns of Haynesville-Middle Bossier Stacked Developments
David Ernsberger is global head of pricing and market insight S&P Global Platts, where he manages a team of reporters and analysts that cover the full range of energy and other commodity markets around the globe. His team produces price benchmarks used to settle the value of physical and futures contracts, and market-leading insight into why markets are moving and what might happen next.
In this week’s “My Career in Energy,” David shares thoughts on where he thinks the energy industry is headed, what he might do differently if he could go back a decade, and what excites him about his job today.
What is the first thing you do when you start work in the morning? Inevitably, I must check my email, WhatsApp and text messages to be sure there aren’t any emergencies anywhere that I need to jump into. All being well, and it usually is, I spend no more than 20 minutes or so cleaning up emails before turning to look through news sources, many of our own but also general news. In my job, the day moves very quickly indeed from the Asia markets close to the U.S. close, and so I try to prioritize getting up to speed on what is going on in the world before grabbing another coffee and taking my first call.
How do you relax? I listen to a lot of podcasts while being sure I walk at least 10,000 steps a day. I usually try and match the intensity of the podcast to the mental energy I have when I’m out and about. I’m not too proud to savor some light listening like a soccer or a gaming podcast, and I enjoy deep markets expertise podcasts when the mood hits.
What do you think the energy industry will look like in 10 years? Without a doubt the energy industry will have made massive progress toward embracing more sustainable energy solutions. The only question in my mind is how much more of our energy will come from new energy solutions like hydrogen, not whether we will have made.
What book has helped you most at work? Early on in my career I picked up “The Prize” by Daniel Yergin, and it’s still the book I think of most often as I’m doing my work. It’s one of the very best examinations of how the oil industry evolved, which is essential for understanding not only the oil market itself, but also the blueprint for almost every other commodity market that exists today. As it happens, Daniel Yergin will be joining my organization through a merger that is ongoing right now, and I’m looking forward to working with him more closely in the future — it will be a big honor.
If you could travel back in time 10 years, would you do anything differently? I have completely changed my lifestyle during lockdown — I exercise a lot more, have a better diet, and spend more time with friends and family. I would absolutely start doing that right away if I went back to 2011, now that I know how much better I feel at work because I have a more balanced lifestyle — and also how long it takes to get fit.
What excites you about your job? Almost every day I speak to people from all around the globe — whether it’s a member of our own team in Platts, or someone active in the commodities markets from Asia to North America, and everywhere in between. I get huge enjoyment from meeting and talking to people from every part of the world as a big part of just doing my job.
Want to connect with Dave? You can find him on LinkedIn here or follow him on Twitter here.
Interested in sharing your career in energy or contributing to the “Enverus Innovator” blog? Fill out the form here.
Market conditions and increased pressure from Wall Street make strategic sourcing and increased efficiency more vital than ever before. The announcement made at last year’s SPARK Conference that Enverus plans to build a complete end-to-end source-to-pay solution that will revolutionize the way buyers and suppliers collaborate and transact couldn’t come at a better time. A strong source-to-pay strategy contributes to overall company success in several different ways including time and cost savings.
Watch the video from Marathon Oil below to learn more about this plan.
Enverus is excited about how this will change everyday processes and experiences across our buyer and supplier network. But when it comes to oil and gas supply chain, procurement, and sourcing, buzz words and terms that sound suspiciously similar abound, so we’ve put together this guide to clarify the differences between these terms, what they mean and why they should matter to you.
What is source-to-pay?
Source-to-pay (S2P) starts when a company chooses preferred vendors to buy from, orders from the select vendors, receives goods or services, processes the invoice, and pays the vendor after the service or product is delivered. The result is more controlled procurement that leads to significant savings. The reason this term may not be familiar is that very few companies offer this integrated solution. It has grown over time driven by the need for connected systems, data and processes.
What are the S2P process steps?
The steps in the S2P process are:
Source
Contract
Order
Receive
Invoice
Pay
What is the difference between S2P and procure-to-pay (P2P)?
Remember the terms we mentioned that sounded suspiciously similar? While S2P and procure-to-pay (P2P) don’t sound very different, there is a distinct difference. P2P starts with the requisition of goods or services and ends when payment is made to the supplier. S2P adds another layer by creating a shortlist of vendors with whom to do business. This is commonly called “Strategic Sourcing.” Think of it as a planning exercise before you order. For the oil and gas industry, procurement is when a dispatch ticket is sent out to the vendor network. Sourcing is when an operator and specific vendor negotiate a price for a good or service that will be requested later.
What is strategic sourcing?
Strategic sourcing is a collaborative process that allows an organization to align purchasing power with its overall value proposition. For example, rather than sourcing friction reducers from seven different suppliers, an operator might choose to source from only two to three suppliers. The result is more controlled procurement that leads to significant savings.
It improves efficiency and quality by building a robust, diverse supply base. Strategic sourcing is a smart move for organizational success because it:
Reduces costs, freeing up cash to expand your business.
Mitigates supply chain risk by vetting a supplier before signing a contract.
Builds strong vendor relationships, which can lead to faster lead times, higher quality, reliable fulfillment and better negotiations.
Why does strategic sourcing matter for oil and gas?
To execute an effective growth strategy, companies must focus on supply chain optimization and efficiency. Energy investors demand that operators generate more free cash flow internally to finance their growth strategies. When implemented correctly, best practices can improve cost control and operating efficiency, freeing up funds to invest bank into a company.
Digitalization of back-office processes and access to spend analytics are key to implementing these new best practices. Together, digitalization and analytics increase process efficiency and enable data-driven decision-making to maximize cost savings and realize economies of scale within your supply chain.
What are source-to-pay best practices?
For a sustainable fiscal strategy, energy companies should focus on supply chain optimization and efficiency. Best practices are proven strategies that, when implemented, streamline and optimize your process. At a high level, these include standardized workflows, improved collaboration, visibility and controls, automation and analytics that measure progress and drive better decisions. The result is improved cost control and operating efficiency, which free up cash flow to invest back into a company.
Read the Enverus guide on S2P best practices to digitalize your entire S2P process and reap the benefits of improved operating efficiency and cost savings in your supply chain.
To learn more, contact [email protected], or request a tour by filling out the form below.
After a successful environmental review by the current administration on federal permits and leases, which followed a temporary permitting ban by the Biden administration, operations in the deepwater Gulf of Mexico have returned to normal — almost.
While there was little impact on existing offshore well permits, a decision which we believe resulted from the industry’s low intensities of greenhouse gas emissions from wells located in waters deeper than 1,000 feet relative to other North American regions, acquiring new leases is on pause for the foreseeable future. This has implications on future exploration and development plans, with many operators and investors grappling to understand which operators screen as well positioned in a no-new-lease environment.
We estimate that upwards of 80% of acreage held today is earmarked for exploration, meaning an ample inventory of prospects exist on current leases. However, identifying operators with long-dated leaseholds is critical to understanding a company’s future exploration targets. Enverus’ proprietary data and analytics allow clients to access company acreage by play type, providing a detailed look at what future exploration portfolios could look like if no new leases are granted for the next three to seven years within the Gulf of Mexico (Figure 1).
FIGURE 1 | Company Holdings of Gulf of Mexico Acreage Prospective for Lower Tertiary Targets
Donald G. Burdick is CEO of Olifant Energy II, an independent oil and gas production company located in Tulsa, Oklahoma.
In this week’s “My Career in Energy,” we learn how Donald got his start in the energy industry, what he does in his downtime, and he shares his thoughts on where he thinks the industry will be in a decade.
What was your first job?
If I think back as far as I can remember, it would be selling Christmas cards door-to-door as a 7-year-old — inspired by business ads in the back of comic books. But the first “corporate paycheck” came from working at Chick-Fil-A.
What was your first job in energy? I was hired by Marathon Oil as an associate geologist through their college recruiting effort. Started work in the Fall of 1984, just as the door was closing for new hires — a foreshadowing of the numerous hire/fire cycles to come.
What would you be doing if you weren’t in this career? I entered my freshman year of college planning on a career in marine biology. Almost skipped college altogether to pursue a career as a professional photographer. My great idea was to develop “Scene TV,” which seems to now be a thing on YouTube … I’m glad someone did it! And I still may end up as a jazz piano player in a smoky nightclub!
How do you relax? Lately, it is by going outside and digging in the dirt. Gardening and landscaping is a great way to remove stress and be creative.
What was your favorite school subject and why? Geology, hands down. Once I discovered you could learn all about the earth and get credits for camping in the mountains or diving in the ocean, I knew this was the degree for me.
What advice would you give someone entering the energy industry today?
Develop entrepreneurial thinking in everything you do. Be brutally honest with yourself on your strengths and weaknesses. Seek business relationships with people of good character and talent. Choose opportunities that help you grow, especially if they seem a little scary.
What do you think the energy industry will look like in 10 years? Assuming the past is prologue, then wild volatility will still be a component of the energy industry in 10 years. Survivors will have learned the art of reinvention and flexibility, along with ways to find calm in the constant storms.
What book has helped you most at work? True story. I had just been laid off at Samson Resources and was trying to find my next job. Through some good fortune, I found myself with two new employment options and was trying to determine the best path forward. While waiting on some copies at a hometown Kinko’s, I saw some business books in the paperback rack. One that caught my eye was “You Can Negotiate Anything” by Herb Cohen. I bought the book, read it for about five minutes and realized the title told me all I really needed to know. I not only used that philosophy to improve the circumstances of my next job, but have remembered that simple admonition for the rest of my career.
If you could travel back in time 10 years, would you do anything differently? What great timing for this question! It was 10 years ago when I first sat down with a representative from a private equity firm and started asking the most basic questions. I did not fully understand the concept of A-B-C shares, or “waterfalls,” or how the PE business model really worked. After about a year and a half of study and contemplation, I took my first plunge into a PE-backed startup. While I still felt somewhat nervous about trying to build a new business from scratch, I have no regrets about pushing out of my comfort zone to try something new. And am still doing that today!
What excites you about your job? Working to solve unexpected challenges with people I trust and respect!
Interested in sharing your career in energy or contributing to the “Enverus Innovator” blog? Fill out the form here.
Austin, Texas (May 18, 2021) — Enverus, the leading global energy data analytics and SaaS technology company, has released its latest FundamentalEdge report. A Delicate Balance focuses on oil and gas’ current winning streak and includes the company’s five-year market outlook, current view of the oil, natural gas and NGL markets, and the financials supporting them.
“Crude oil prices have had a good run over the past several months and the backwardated structure in futures markets is encouraging continued inventory destocking. Improvements in demand for key motor fuels like gasoline and diesel have certainly played their part, but ultimately the key factor behind the continued tightening of physical markets has been production cuts enacted by OPEC+ members. OPEC+ cohesiveness though may be put to the test if the United States and Iran reach an agreement in ongoing negotiations about reconstituting the nuclear deal the U.S. withdrew from in 2018. If this happens, we could see up to 1.5 MMBbl/d of Iranian crude re-enter the market starting as early as this summer,” said Jesse Mercer, senior director of Crude Market Analytics at Enverus.
“Natural gas is benefiting from higher crude prices, too, and, as a result, LNG exports continue to set record highs. But how long this growth continues depends on several factors, including the role natural gas will play in our energy future. It is certainly going to be key in any kind of energy transformation, but for how long will be telling. For now, operators are enjoying a winning streak.”
Key takeaways from the report:
Crude oil prices have been on a winning streak since the fourth quarter of 2020 and continue to test resistance at higher levels. With demand for key motor fuels like gasoline and gasoil/diesel on the mend, the continued vigilance by OPEC+ members to manage supply has been instrumental to the global rebalancing and, therefore, higher oil prices. Backwardation in both WTI and Brent forward markets are indicative of physical market tightening, with negative carry trades leading traders to empty storage tanks. Trouble though is brewing on the horizon as the Biden Administration pursues negotiations with Iran which could ultimately lead to the return of roughly 1.5 MMBbl/d of Iranian supplies on the world market by the end of 2022. Despite the desire of OPEC+ participants to unwind current production cuts, active market management is likely to be a feature of this market for the foreseeable future.
Natural gas production growth has resumed in 2021 after a challenging 2020 with its weak demand and a low-price environment. Two key factors are driving this growth: LNG exports and higher crude oil prices. LNG exports continue to set record high levels, currently reaching 10.8 Bcf/d in April 2021.The forward curve for WTI shows oil prices in 2021 above $60; this is an increase of about $15/Bbl compared to the January report. Higher crude oil prices mean more associated natural gas from the Permian, DJ, and even Eagle Ford. Enverus expects gas prices to average greater than $3.00/MMBtu.
Natural gas liquids production is expected to remain relatively flat in 2021 and grow in 2022+. Ethane has temporarily been relieved from market tightness as the February winter storm Uri decreased demand for the product at petrochemical facilities. However, as those facilities ramp back up, the market will once again be tight based on current recovery. Propane, similar to ethane, is in a tight-market situation. Days of supply in inventory is near the bottom of the five-year range and exports are near all-time highs. Normal butane will see demand and supply increases as refineries continue to increase operating rates and gasoline blending picks up. C5, like normal butane, will see an uptick in demand from gasoline blending, but also from increased Canadian production where natural gasoline is used as a diluent.
2021 budgets have been set and capex is flat year over year. We expect to see limited upward revisions to activity levels given the market’s recent favorable reactions to public operator capital discipline. This quarter, we are introducing more in-depth operator coverage through the benchmarking of 35+ operators using NAV model outputs from our Capital Markets team. We see relatively low reinvestment rates and capital discipline leading to slight production growth from large caps, limited growth from small-to-mid capital (smid-cap) operators, and high free cash flow yields across the coverage list. Lastly, buoyed oil prices leave many hedge programs out of the money. We suspect many operators used much of their remaining hedge capacity to lock in the highs in 1Q21.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Enverus is a portfolio company of Genstar Capital. Learn more at Enverus.com.
With increased focus on fiscally responsible operations and more efficient teams across the industry, it has become more important than ever to streamline efforts and gain visibility into your spend in different markets. Traditional industry KPIs alone – the movement of permits, rig counts, the number of completions – can’t help you drive a fiscally sustainable supply chain strategy because they don’t inform you on pricing trends. Additionally, a blind or blanket discount strategy is no longer sustainable due to leaner teams and a stressed supplier market. Therefore, the need for a platform that streamlines supply chain management strategies and creates a win-win situation for buyers and suppliers has become crucial.
Stop flying blind
The example below demonstrates why the “blind” approach to supply chain strategy doesn’t work. When you only look at Company B’s price curve over two years (left), a price drop of 60% looks favorable. But data shows that the aggregated market price index dropped by 80% during this same period. The comparison of Company B’s prices with the market (right) demonstrates that there is room for additional cost savings, as it is still overspending compared to the market.
Single Company Category Level Price Curve Compared to a Category Level Market Index Price Curve
New Enverus Market Price Indices solve this problem by combining the nearly $200 billion of annual spend flowing through the OpenInvoice network with Enverus activity-based metrics. Now companies can compare their own pricing on various categories of goods or services to market indices in a specific region. Unlike other solutions that are based on assumptions and “black box” models, the indices are based on actual, anonymized, analytics-grade spend data that is frequently refreshed for the most current insights.
With these insights, buyers can see deviation from market trends, understand the economic impacts of pricing, uncover specific opportunities for additional cost savings, negotiate win-win agreements with suppliers and forecast future trends. This helps maximize the value generated from this analysis and also acts as a prescriptive system, driving strategies in poor performing areas.
Market Price Indices reveal opportunities and market signals for suppliers
Accurately understanding market and pricing trends is not simply beneficial for buyers. Suppliers can gain significant competitive advantages by accurately understanding how trends are changing in an area. A market pricing comparison of friction reducers in the Permian Basin to the Appalachian Basin is a perfect example of how both buyers and suppliers can benefit from regional price trend analysis. The price variation in the Appalachian (left) is much smaller than the Permian. This is because, while both areas have high activity, Appalachia is a very tightly controlled market with fewer supplier options for downhole. The Appalachian market index indicates there may be additional opportunity for suppliers, compared to a market that might be oversaturated, like the Permian. For operators, the wider variation in the Permian price index indicates a potential opportunity to drive frac costs down while negotiating a win-win price agreement with suppliers.
Appalachian Friction Reducer Price Index Compared to the Permian Price Index
Leveraging market price indices is extremely important for both buyers and suppliers because current price strategy can have a huge influence on having a balanced perspective, now and in the future. Market Price Indices provide visibility into the impact of price changes on individual parts of complex services in different regions, making it much easier for buyers to find opportunities for balanced, sustainable cost savings and improve strategic sourcing. For suppliers, understanding how trends are evolving in various markets can reveal new business opportunities and signal market changes. Only Enverus can offer these unique insights. Because Market Price Indices are part of a centralized ecosystem, price analysis is easy and sustainable. Our world’s energy supply relies on buyers and suppliers working together with maximum efficiency to extract resources. Enverus is committed to providing insights that assist both sides to strengthen their business, while creating win-win working relationships that drive our industry forward.
About Enverus Market Price Indices
Enverus Market Price Indices compare your pricing to the market by region or basin, providing true visibility to specific company performance. With these insights, you discover your deviations from market trends, the economic impacts of your pricing, find specific opportunities for additional cost savings, and forecast future trends.
To learn more, contact [email protected], or request a tour by filling out the form below.
Like real currency, cryptocurrencies are a medium of exchange which can be used to purchase goods and services virtually. Elon Musk, for instance, announced early this year that Tesla would be accepting cryptocurrencies in exchange for Tesla products, making it the first major automaker to do so. Cryptocurrencies are attractive for several reasons: there are little to no transaction fees, anyone is free to use cryptocurrency without getting approved by a bank and international transactions can be carried out quickly, ideal in a globalized world. Black markets love them too. Our focus is on bitcoin as it is the largest and most established cryptocurrency in circulation.
Supporters of bitcoin emphasize that it is completely deregulated and independent from central banking systems, which may raise an eyebrow or two, especially with Jerome Powell and Janet Yellen. Those who are bullish on bitcoin also tend to be bearish the U.S. dollar. For example, Figure 1 shows the explosive rise in bitcoin against the surge in U.S. money supply since the beginning of the COVID-19 pandemic.
Ultimately, the number of bitcoins that in circulation is capped at 21 million and about 18.5 million are in circulation today, or nearly 90% of the total. Bitcoin is software. It is stored and transacted using distributed and decentralized blockchain technology; technology that chains together blocks of information (i.e., massive databases). Bitcoin miners are rewarded with coins by running computationally-intensive algorithms to complete blocks of transactions.
Figure 2 shows estimated electricity demand associated with the creation and maintenance of bitcoin bounded by high and low scenarios depending on the efficiency of technologies used. The best estimate for bitcoin’s annual electricity demand amounts to about 150 TWh, which is about 0.1% of total annual global electricity generation. This is a negligible draw on a global basis. However, environmentalists have raised concerns about the resulting emissions associated with cryptocurrencies. Had all this bitcoin electricity usage been generated with coal as feedstock, total CO2 emissions would amount to about 135 million tonnes, or about 0.4% of the global total. This is roughly equivalent to the annual emissions of 30 million standard cars. With this, it is no surprise Elon Musk reversed course and recently suspended taking bitcoin payments for its vehicles. Perhaps, Elon and Greta Thunberg can now get along.
Lindsey McCarty is a managing partner and COO for Selenite Energy Partners, a portfolio company of Carnelian Energy Capital that provides structured capital solutions for the energy industry, where she’s responsible for engineering and technical analysis.
In this week’s “My Career in Energy” Q&A, Lindsey tells us about her first job, what excites her about her current role, and shares advice for those entering the energy industry today.
What was your first job?
My first job was as a production engineer for Marathon in Oklahoma City, and to this day it remains one of my favorite assignments. The ability to spend material time on location early in my career was invaluable, and I owe much of what I know today to some fantastic mentors during my time in that role.
What is the first thing you do when you start work in the morning? Each morning I start with a cup of coffee while I read analyst notes and news, check emails, go through office mail and handle any back-office items that need addressing. We are a small group, so we all wear a lot of hats at Selenite.
What would you be doing if you weren’t in this career? I would try to find a way to craft for a living. When that inevitably did not work out, I would love to teach high school math.
How do you relax? My favorite ways to spend free time are knitting, laughing with friends and family, playing with my sons, and traveling with my husband.
What was your favorite school subject and why? I always appreciated math, especially statistics, but my favorite class was band.
What advice would you give someone entering the energy industry today?
There is a place for you here. Where most people see headwinds, look for solutions. Be the kind of person other people want to work with. Take any opportunity you can to learn data science because it is now and will continue to be a very valuable skill set that can be applied in numerous ways in energy. This industry is never stagnant, and while I don’t know what it will look like in 10 years, I know it won’t look exactly like it does today so position yourself to be flexible and hold on tight.
What book has helped you most at work? In work and life, “Outliers” and “Talent is Overrated” have stuck with me. In short, generally, those who excel do so because of the hours they put in rather than sheer innate ability.
If you could travel back in time 10 years, would you do anything differently? If I could go back in time, I wouldn’t change any decisions I made or experiences I’ve had, but I would tell myself to worry less.
What excites you about your job? I love crossing paths with many different people and getting to analyze deals from all over the continent. It’s fun to work for a small company where I have a seat at the table in terms of making decisions, but still get to do technical analysis — often those are mutually exclusive.
Want to connect with Lindsey? You can find her LinkedIn here.
Interested in sharing your career in energy or contributing to the “Enverus Innovator” blog? Fill out the form here.
With 1Q21 earnings well underway, it is clear that E&P companies are generating more profits (as measured by free cash flow) than they have in a long time. Cumulative cash flow generated for independent E&P companies in Q1 increased tenfold from the previous year, based on the sample set we have now. Capital discipline reflected in 2021 budgets (Figure1) and improving commodity prices helped to pivot the industry from growth to cash generation. The question in most investors’ minds is will this be sustained into the future or will the industry shift back to growth and put pressure on commodity pricing with an influx of supply?
Some factors to consider that might lead to an increased capital spending in 2022 will help put the question into perspective. First, although we are seeing capital discipline in 2021 budgets, these budgets on average are weighted to the second half of 2021. Is this weighting a protection against potential cost inflation as activity returns in 2021 or a ramping of activity into the end of the year? If the latter, do 2022 budgets reflect this increased 2H21 cadence and potential production growth? Second, hedging programs initiated in the 2020 price downturn are negatively impacting some operator’s ability to increase capital in 2021. As these hedges roll off, will budgets increase? Third, there is always the prisoner’s dilemma that exists watching other operators grow production and EBITDA. Is there a domino that falls to bring the industry back to a growth mindset in 2022 as strip price hovers around $60/bbl WTI or do cash flow and shareholder returns prevail?
Although there are numerous factors pushing towards higher capital budgets in 2022, we have seen some management incentive programs shift focus away from growth and focus more on cash generation, shareholder return and ESG metrics. Does this become industry standard and will this motivate management teams to remain capital disciplined and to focus on sustaining high levels of cash flow over growth? Only time will tell.
FIGURE 1 | 2020 Versus 2021 E&P Capital Spending by Region
In this week’s “My Career in Energy” interview, we’re featuring our very own Mike Mroz.
Based out of the Denver area, Mike has been with Enverus since our days as Drillinginfo. He joined our team in 2013 through our acquisition of Transform Software & Services Inc. as a territory sales manager. Today, Mike is our senior vice president of Energy Analytics Sales, where he helps his team, and Enverus, grow and stay at the forefront of technology and innovation.
Now without further ado, let’s take a look at Mike’s career in energy.
What was your first job in energy and how did you get it?
It all started back in 1998. My first job in the industry was in seismic acquisition at Digicon Geophysical. I was at a college career fair and interviewed with them. I really liked the idea of working six weeks on and six weeks off, right out of school. It was a fun job, the six weeks off were great but spending six weeks at a time away from family and friends was hard. It’s an amazing thing to see what goes on 24/7, 365 days a week in the energy industry.
Tell us about your current role?
I lead Enverus’ Corporate, Specialty Verticals and Trading & Risk Sales teams. It’s a great career, having the ability to interact with so many different customers in different sub industries of the energy space. Our teams are made of such a diverse set of knowledge and abilities — it’s really fun to work with a team like this.
Who is your inspiration at work?
My inspiration at work are my people and doing everything I can to make them as successful as possible.
What is the first thing you do when you start work in the morning? Check my calendar, though, I often do that the night before to get a head start. I feel it’s important to have your day planned out and know what needs to be accomplished each day.
How do you relax? I’m in sales — that’s funny!
What was your favorite school subject and why? Math has always been my favorite subject. I just love numbers and putting them together and solving analytical problems.
What advice would you give someone entering the energy industry today?
Be an early adopter of every technology you can get your hands on.
What do you think the energy industry will look like in 10 years’ time?
It’s time for technology to take over. We’ve heard about the “great shift change” for a long time and it just hasn’t come. But it’s about to.
Want to connect with Mike? You can find his LinkedIn here.
Interested in sharing your career in energy or contributing to the “Enverus Innovator” blog? Fill out the form here.
Cold flow heavy oil (CFHO), as the name makes clear, describes the production of thick crude that flows slowly — think of molasses. Unlike some oil sands projects where steam is injected underground to decrease viscosity and allow the oil to flow, CFHO is pumped to surface without the addition of steam. CFHO typically relies on multiple horizontal laterals to increase reservoir contact. We subdivide CFHO production in Alberta into three sub-plays: Clearwater, Peace River and Lloydminster.
Many CFHO operators drill multiple horizontal segments off the same vertical wellbore, with some exceeding 15 legs. However, the provincial energy regulator’s documentation system does not allow for more than nine laterals per well, creating a significant data deficiency when analyzing the play. To combat this problem, Enverus digitized thousands of additional multi-laterals to create a more complete dataset. The newly captured additional legs (Figure 1) drastically impact well costs and lateral length-normalized production, important benchmarks in assessing economics. We estimate oil recoveries, after normalizing for lateral length, for the three sub-plays averaged a 36% decrease for wells with more than nine legs. Enverus clients now have access to the first complete dataset of multi-leg laterals, allowing increased accuracy in analysis.
FIGURE 1 | Multi-Leg Laterals Digitized by Enverus
What is the first thing you do when you start work in the morning?
What was your first job?
What was your first job?
What was your first job in energy and how did you get it?
