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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.
In order 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
gathering and cleaning data takes more time than the actual
analysis—especially when the seller's data is not available and
analysts are forced to rely on the seller's claims about their
assets' 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, in particular,
benchmarking companies of similar size and similar acreage holdings
is the best approach. With access to 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 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 behind 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 production forecasts
from type curves can be used to model future revenue based on CAPEX
and oil prices. This 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 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
Modeling 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 production and costs; modeling 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 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 in order to revisit the analyses that are most important
to you. By integrating upstream and midstream datasets with
derivative content, 'Energy Studio: Impact' is able to 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.
