Problems Oil Executives Face – Finding Alternative Ways to Unlock Capital

Drill the well.  Complete the well.  Produce the oil.  Sell the oil.  Make a profit.
These are normal activities that happen every day in a producing oil and gas company.  When oil is $100 and the cashflow is growing, all stakeholders are satisfied.  So what happens when oil drops to $30?  Not as many wells are drilled, not as much oil is produced and not as much profit is made.
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Building Enterprise Value in E&P Companies: People, Strategy & Process

The standard definition of Enterprise Value is the Market Value of a company’s Debt and Equity less cash. It is typically used to determine the offering price for a takeover. However, in exploration and production, Enterprise Value has an additional meaning: The market value of the entire Business minus the market value of the company’s individual Assets. That is, the intrinsic value of the company as a capital steward. Frequently a company becomes a takeover target when an acquirer perceives they can manage the target’s assets better than the incumbent team, creating added shareholder value. The ability to sustain a higher intrinsic value relative to its assets depends on the company’s stewardship of capital.  Is the current leadership team better able to exploit and grow the assets than a suitor?  If the business generates returns that exceed its cost of capital it has a positive intrinsic or Enterprise Value as a business. The company may have a higher value than it would if the assets were sold off or managed by another leadership team. At least that could be argued to the shareholders. Conversely, a company that has failed to generate at least its cost of capital, if not an excess return, is vulnerable and the assets probably should be sold.
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Gaining Value Through Integrated Upstream Asset Management

The precipitous fall in crude oil prices in 2014 shook the oil industry, but that marketplace swing magnified the need for integrated upstream asset management. To drive growth, maximize profit and minimize risk, upstream asset development must be considered holistically.
In this article, we will examine how this approach yields beneficial business results regarding capital expenses and project validation, operating expenses and resources, and enterprise planning.
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The Domestic Oil & Gas Industry’s Current Debt Problem – A New Chapter of an Old Book

The price of oil has dropped precipitously to half its June 2014 peak. Natural gas prices have experienced a similar recent collapse. The oil and gas (“O&G”) industry has continually demonstrated a “boom and bust” market dynamic. The failure to manage through periods of low prices can result in disastrous consequences. Unfortunately, the recent dramatic increase in debt load has compounded the problem. A complete understanding of the challenges presented by price volatility and proactively implementing appropriate solutions to address these challenges are critical to surviving in the current environment.
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