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Placing a value on an oil and gas company is easier said than
done. The value of an exploration and production company is driven
by its assets; the value of a company's assets is driven by
commodity prices, which change every day. As the past decade has
shown, downturns and drastic price swings are the new normal.
To make smart investment decisions and decrease risk, analysts
must thoroughly evaluate every potential investment. Metrics like
net asset value, field netback, and enterprise value to reserves
are all part of operator valuation. A robust dataset of both
financial and technical data is critical for a comprehensive
evaluation.
In today's competitive market, analysts must act quickly when
evaluating potential purchases. But it's hard to act quickly when
collecting and cleaning data takes more time than the actual
analysis - especially when the seller's data is unavailable and
analysts are forced to rely on the seller's claims about their
asset value. Sellers will portray their assets in the best possible
light, and without transparency into their data or methodology,
it's difficult to know if their claims are true.
Validating future production claims on multiple wells per day is
time-intensive and requires a robust dataset, but the costs of
indecision are high. Every day that goes by without a decision is a
chance for a competitor to scoop up the best companies.
Investor lie detector
Validating a seller's claims without access to their data is
possible with the right database and platform. Access to data from
every part of the energy value chain in a single platform makes it
easy to analyze trends and understand what affects production and
revenue.
With integrated datasets, analysts can take advantage of several
techniques to validate sellers' claims about their assets:
Benchmark operators
Comparing a company to its peers is one way to determine if it
is a good investment. For oil and gas companies, benchmarking
companies of similar size and similar acreage holdings is the best
approach. With access to oil and gas data from all operating
companies in North America, analysts can perform an unbiased
comparable company analysis, without relying on the seller to
provide data.
A side-by-side comparison of ExxonMobil (left) and Chevron
(right) in the U.S. past, current and future data about wells,
acreage quality, breakeven, production, completion, and more
provides a full picture of how an operator is performing relative
to its peers.
Understand market trends
Historical and current oil and gas market trends, like drilling
activity, historical transactions, and available assets, are
valuable tools in determining a company's fair market value.
Companies that are outperforming the market likely have a high ROI,
while companies that are lagging should be avoided. Comprehensive
technical and financial datasets show the full picture of a
company's valuation, helping decrease risk in investment
decision-making.
Validate future revenue claims
Economic factors, like operating expenses and commodity prices,
can make or break a potential purchase. The oil and gas production
forecasts from type curves can be used to model future revenue
based on capital expenditure (CAPEX) and oil prices. This oil and
gas data can also be used to calculate breakeven prices—a key
factor in determining the economic viability of an operator's
assets.
It's important to look at type curves for every well, as sellers
may be showing only the best data or data from a certain time
period. Companies tend to drill the most promising areas first, so
initial oil and gas production results may not reflect the
company's entire portfolio. Analyzing type curves from all of an
operator's wells and the surrounding area provides important
context when evaluating potential revenue.
Analyze with custom metrics
Modelling a variety of scenarios provides a comprehensive idea
of what to expect from a potential purchase. Every asset in an
operator's portfolio contributes to their overall value and revenue
potential. While an asset's geology can't be changed, the well
designs and completions programs are flexible. Engineering changes
can affect oil and gas production and costs; modelling a variety of
scenarios tells analysts what to expect if service costs change or
new engineering designs must be implemented. Commodity prices
change, so forecasting revenue at a range of oil prices is
essential to fully understand a prospect's potential.
De-risk your investment decisions
New from S&P Global Commodity Insights,
Energy Studio: Impact takes the guesswork out of investment
evaluations. The platform integrates data from the entire energy
value chain, including acreage, rigs, permits, type curves,
economics, and more. Users no longer have to rely on sellers to
provide data, enabling them to validate claims about an operator's
revenue potential.
The platform includes type curves for every producing well in
North America, as well as estimated CAPEX and breakeven points,
allowing analysts to benchmark performance and accurately predict
revenue from future production. All oil and gas data in the
platform is analytics-ready, eliminating the lengthy data gathering
process required for each prospect.
In today's lean, competitive market, time is money. With the
right data, users can out-analyze their peers and make a confident
decision about every investment opportunity.
About 'Energy Studio: Impact'
Energy Studio: Impact is a web-based platform that transforms
big data into real-time energy analytics across the entire energy
value chain. It covers upstream, midstream, emissions, and
commodity pricing datasets and was created to help engineers,
geoscientists, strategists, business development, and financial
analysts to make better decisions faster.
Energy Studio: Impact provides normalized and derivative
content that accelerates the ability to extract meaningful
insights. Whether you are trying to understand what drives
productivity, do a quick screen for opportunities, or benchmark
performance, our integrated workflows will get you there
faster.
Utilizing the power of Heavy.AI's GPU processing power, you can
answer questions at the speed of curiosity, and save custom
dashboards to revisit the analyses that are most important to you.
By integrating upstream and midstream datasets with derivative
content,
Energy Studio: Impact can provide a clear end-to-end workflow
solution to reduce risk, improve returns and provide objective
valuation abilities.
*** Want to determine if a certain oil and gas operator is a
good investment candidate with a high ROI or not? Book a
15-minute personalized demo to run a quick background check on
operators and validate their claims of forecasted revenue on
potential investments.
