M&A activity decimates size - but not strength - of oil and gas sector
The number of conventional junior and intermediate oil and gas players has fallen 36 percent over the past four years to 77 in the third quarter of 2009. This compares with 121 in the third quarter of 2005, 111 in 2006 and 99 in 2007.
This is just one of the findings in the latest iQ Report by
"The junior and intermediate companies that are continuing into 2010 may be fewer in number, but they are durable and dynamic," said Knapp. "What doesn't kill you can make you stronger."
Knapp said the quality of the remaining players is rising thanks to strong crude oil prices, improving natural gas prices and a round of recent equity financings that put balance sheets on firmer ground.
In addition to tracking the number of oil and natural gas producers, the latest iQ Report reveals the following about the recent performance of the junior and intermediate energy sector:
- The intermediate grouping showed median cash flow netbacks of $20.31
per barrel of oil equivalent (boe) for the third quarter of 2009. This
is almost double the median junior cash flow netback of $10.29 per
boe. This is indicative of a higher crude oil weighting for the
intermediates, stronger hedging programs and lower costs on a per boe
basis due to economies of scale. The higher cash flow netbacks also
translate into lower debt to cash flow ratios and lower share price to
cash flow ratios.
- One method of valuing oil and gas companies is a comparison of
enterprise value (the sum of market capitalization plus net debt)
versus average production rates. This number varies greatly from
$14,000 to $645,000 per flowing boe/d for juniors, and from $29,000 to
$153,000 for intermediates. The markets are expecting great things
from the companies with higher valuations, while expectations are low
for companies at the bottom.
- Nine junior companies in the iQ Report had negative or negligible cash
flow. All of these companies had less than 1,500 boe/d of production
for the quarter, showing that the smallest companies got hit hardest
by low commodity prices this year.
- Only four of 54 junior oil and gas companies and only 10 of 23
intermediate companies reported positive earnings in the third quarter
of 2009. The median junior lost $2.2 million during the third quarter
while the median intermediate lost $1.8 million.
- Perhaps a leading indicator of the sector's profit potential, most
investors in the sector would have been pleased with the performance
of their portfolio in the third quarter of 2009. The median total
return including dividends and distributions for both the juniors and
intermediates was positive during the quarter and the subsequent two
months of October and November. In fact, from July 1 to November 30,
2009 a median return of 22 percent was achieved for the intermediates
and 34 percent for the juniors.
The following list shows the production levels of all the junior and intermediate companies that met the criteria for inclusion in the Q3 iQ Report. Companies excluded from the list include those whose primary business was not oil and gas exploration, development and production and those whose production was not primarily from Western
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JUNIOR OIL AND NATURAL GAS COMPANIES
PRODUCTION IN THE THIRD QUARTER OF 2009
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Company Stock Oil & Natural Average
symbol liquids gas daily
(T equals TSX, production production production
V equals Venture) (bbls/d) (mmcf/d) (boe/d)
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Anderson Energy Ltd. AXL-T 1,013 36.282 7,060
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Angle Energy Inc. NGL-T 3,100 26.710 7,552
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Arcan Resources Ltd. ARN-V 913 2.166 1,274
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Argosy Energy Inc. GSY-T 104 4.316 823
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Arsenal Energy Inc. AEI-T 1,526 3.327 2,081
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Bellamont Exploration
Ltd. BMX.A-V 194 3.768 822
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Bellatrix Exploration
Ltd. BXE-T 2,253 31.075 7,432
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Berens Energy Ltd. BEN-T 875 18.450 3,950
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BlackPearl Resources
Inc. PXX-T 4,247 5.065 5,091
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Bonterra Oil & Gas Ltd. BNE-T 3,084 10.881 4,898
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Canadian Phoenix
Resources Corp. CXP-V 894 0.220 931
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Canext Energy Ltd. CXZ-V 228 4.089 910
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Cequence Energy Ltd. CQE-T 195 6.734 1,317
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Cinch Energy Corp. CNH-T 207 13.044 2,381
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Crocotta Energy Inc. CTA-T 1,000 10.005 2,668
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Culane Energy Corp. CLN-V 872 2.136 1,229
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Delphi Energy Corp. DEE-T 1,168 33.628 6,773
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Diaz Resources Ltd. DZR-T 84 2.966 578
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Enterra Energy Trust ENT.UN-T 5,411 26.977 9,907
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FairWest Energy Corp. FEC-T 77 2.927 565
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Fortress Energy Inc. FEI-T 13 6.741 1,137
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Freehold Royalty Trust FRU.UN-T 4,441 15.315 6,994
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Great Plains
Exploration Inc. GPX-T 477 4.271 1,189
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Insignia Energy Ltd. ISN-T 411 10.315 2,130
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International Sovereign
Energy Corp. ISR-T 84 4.577 847
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Ironhorse Oil & Gas Inc. IOG-V 9 6.252 1,051
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Legacy Oil & Gas Inc. LEG-T 1,801 0.280 1,847
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Midnight Oil
Exploration Ltd. MOX-T 635 7.064 1,812
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Midway Energy Ltd. MEL-T 154 4.401 887
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Monterey Exploration
Ltd. MXL-T 436 9.918 2,089
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NuLoch Resources Inc. NLR.A-V 242 1.968 570
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One Exploration Inc. OE.A-V 177 2.036 517
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Open Range Energy Corp. ONR-T 201 12.612 2,303
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Orleans Energy Ltd. OEX-T 639 19.254 3,848
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Painted Pony Petroleum
Ltd. PPY.A-V 1,052 3.617 1,655
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Petro-Reef Resources
Ltd. PER-V 131 4.288 845
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ProspEx Resources Ltd. PSX-T 493 8.906 1,978
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Questerre Energy Corp. QEC-T 352 1.680 632
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Redcliffe Exploration
Inc. RXP.A-V 263 3.605 864
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Rock Energy Inc. RE-T 1,763 8.775 3,225
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Seaview Energy Inc. CVU.A-V 432 12.486 2,513
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Second Wave Petroleum
Ltd. SCS-V 553 2.624 990
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Stonefire Energy Corp. SFE.A-V 360 5.325 1,247
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Storm Exploration Inc. SEO-T 1,130 41.399 8,030
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Sure Energy Inc. SHR-T 81 3.453 657
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Terra Energy Corp. TT-T 1,309 28.845 6,117
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Triton Energy Corp TEZ-V 39 4.658 816
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Twin Butte Energy Ltd. TBE-T 849 12.269 2,894
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Twoco Petroleums Ltd. TWO-V 0 6.068 1,011
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Vero Energy Inc. VRO-T 1,302 31.850 6,610
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West Energy Ltd. WTL-T 3,029 4.438 3,769
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Wrangler West Energy
Corp. WX-V 288 4.888 1,103
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Yoho Resources Inc. YO-V 369 11.811 2,337
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Zapata Energy
Corporation ZCO-V 1,428 6.295 2,478
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INTERMEDIATE OIL AND NATURAL GAS COMPANIES
PRODUCTION IN THE THIRD QUARTER OF 2009
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Company Stock liquids gas daily
symbol production production production
(T equals TSX) (bbls/d) (mmcf/d) (boe/d)
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Advantage Oil and Gas AAV-T 8,431 91.200 23,631
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ARC Energy Trust AET.UN-T 30,638 193.117 62,824
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Baytex Energy Trust BTE.UN-T 32,553 60.420 42,623
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Birchcliff Energy Ltd. BIR-T 3,017 45.210 10,552
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Bonavista Energy Trust BNP.UN-T 23,924 193.205 56,125
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Celtic Exploration Ltd CLT-T 3,813 68.964 15,307
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Compton Petroleum
Corporation CMT-T 3,208 99.310 19,760
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Crescent Point Energy
Corp. CPG-T 40,854 32.806 46,322
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Crew Energy Inc. CR-T 4,819 49.478 13,065
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Daylight Resources
Trust DAY.UN-T 6,794 100.250 23,502
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Enerplus Resources Fund ERF.UN-T 36,130 323.884 90,111
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Fairborne Energy Ltd. FEL-T 3,855 56.797 13,321
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Galleon Energy Inc GO-T 5,714 57.012 15,216
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Iteration Energy Ltd. ITX-T 4,523 64.176 15,219
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NAL Oil & Gas Trust NAE.UN-T 11,801 69.700 23,418
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NuVista Energy Ltd NVA-T 7,334 121.028 27,505
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Paramount Energy Trust PMT.UN-T 0 152.400 25,400
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Paramount Resources
Ltd. POU-T 3,733 49.880 12,046
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Pengrowth Energy Trust PGF.UN-T 39,394 232.444 78,135
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Peyto Energy Trust PEY.UN-T 2,916 89.257 17,792
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Progress Energy
Resources PRQ-T 3,869 157.520 30,122
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Trilogy Energy Trust TET.UN-T 3,740 91.759 19,033
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Zargon Energy Trust ZAR.UN-T 5,382 28.234 10,088
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Note: Barrels of oil equivalent are based on an energy equivalency of six
thousand cubic feet of natural gas to one barrel of oil.
For further information: Peter D. Knapp, President, Bryan Mills Iradesso, 400, 805 10th Avenue SW, Calgary, Alberta, T2R 0B4, T: (403) 503-0144 x202, [email protected], http://iq.bmir.com
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