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Drillers driven from Permian look to Powder River Basin, where pipelines await

Can ComScore Break Nielsen's Near-Monopoly On Ratings?

Most TV Everywhere Viewing Is Live TV In The Home

Consumer Insights Online Video User Overview

Public Companies Going Private


Drillers driven from Permian look to Powder River Basin, where pipelines await

As the Permian Basin produces more than 3 million barrels per day and runs into a lack of pipeline capacity, causing price discounts, some larger independent drillers are heading north to the Powder River Basin, where there are pipelines in place to help market the production.

The basin in Wyoming, known more for coal, is experiencing the beginning of a gas and oil boom as producers seek to exploit what EOG Resources Inc. described as "a mile-deep column of pay and multiple targets," including the Mowry and Niobrara shales. With improved drilling techniques, drillers are now able to exploit the high-pressure rock, which holds many similarities to the Eagle Ford Shale in south Texas.

"New technology and lower well costs have resulted in economic wells," Williams Capital Group upstream oil and gas analyst Gabriele Sorbara said in an interview. "The area is appealing due to its stacked-pay potential, resulting in lots of running room from a resource-in-place and inventory perspective." Production in the basin is about 140,000 barrels per day, according to an August note by BTU Analytics, with 175,000 bbl/d possible in 2019.

SNL Image

Sights like these are becoming increasingly common as major producers descend on Wyoming's Powder River Basin.
Source: Associated Press

One company that Sorbara said is "banging the drum" for the Powder River Basin is Chesapeake Energy Corp., which has increased its oil production in the basin by 90% in 2018, reaching 32,000 barrels of oil equivalent per day at the end of July. CEO Doug Lawler said during a second-quarter earnings call that the company expects production there to double in 2019.

EOG, meanwhile, believes its position in the Mowry Shale is prospective for 1.2 billion boe, with oil cuts varying from 20% to 60% depending on location. In the Niobrara, the company estimates that it holds 640 million boe on its acreage, with about half being crude oil.

"Low finding and development costs drive higher corporate-level returns," EOG CEO William Thomas said during the company's second-quarter earnings call.

Anadarko Petroleum Corp. said during its most recent earnings call that it has established a position of 300,000 acres in the Powder River Basin at less than $2,500 per acre. The driller is focused on the Turner formation and reported initial production totals of more than 2,000 boe/d, with more than 80% oil. Even though the company has a presence in a number of other major plays, including the Permian, Anadarko could start diverting large amounts of capital to the Powder River Basin as soon as 2019.

Takeaway options

The appeal of the Powder River Basin goes beyond the multiple layers of oil-heavy rock. There are also pipelines waiting to carry the oil away once it is produced, something that can draw rigs and money originally intended to go elsewhere.

One midstream partnership has developed a clear advantage in the region. Tallgrass Energy LP's significant regional presence and multiple pipeline systems, including Pony Express, could squeeze out midstream companies looking to establish new positions in the basin.

"The problem for the midstream companies is ... they've got to find a bunch of customers that are in dire need of takeaway capacity, and a lot of those guys have already signed up on Pony Express," John Zanner, an analyst at the consulting firm RBN Energy, said in an interview. "They've got to cobble together a lot of volumes in order to figure out how they're going to build the next big pipeline out of the Powder River."

SNL Image

The only new crude oil Powder River Basin pipeline that has been announced is Tallgrass and Silver Creek Midstream LLC's 100,000-bbl/d Iron Horse project, which will connect producers to refineries on Tallgrass' Pony Express pipeline system and the Cushing oil hub.

With more volumes entering Cushing, however, there is also an opportunity for pipeline companies to accommodate growing Powder River Basin production by building further downstream. Tallgrass has proposed the Seahorse pipeline from Cushing to the St. James, La., refining complex and a separate new export-capable liquids terminal near the mouth of the Mississippi River. The pipeline is expected to transport up to 800,000 bbl/d.

Private equity

With upstream interest picking up and the prospect of midstream opportunities coming with it, the Powder River Basin is starting to attract an increasing amount of private capital.

"From 2013 to 2016, we had a pretty stable base of producers … and I think we're starting to see some turnover there, some private equity coming in that has a bigger checkbook and is buying some of these smaller guys out," Meritage Midstream Services II Chairman and CEO Steve Huckaby said in an interview. "It would not surprise me if we had 10 to 12 new [producers] here in the last 12 months."

Silver Creek founder and CEO Patrick Barley agreed that a "whole host of [upstream and midstream] private equity players" have expressed interest in the region. "You've got several billion dollars of commitments collectively that have been made there," he said in an interview.

Optimism about the Powder River Basin is also spurring private firms like Silver Creek to expand their holdings. Genesis Energy LP on Aug. 29 announced that it had agreed to sell its Powder River Basin Pipeline and an associated crude oil gathering system and rail facility to the Tailwater Capital LLC-backed company for about $300 million.

The chances of the basin seeing a production boom that causes a corresponding pipeline capacity deficit to the one in the Permian is unlikely, according to analysts who cover the region closely. RBN's Zanner noted that Wyoming rig counts "pale in comparison" to those in West Texas. So does interest in new pipelines, according to Mornigstar director of oil and products research Sandy Fielden.

"It's not the same frothy investment in new opportunities to build pipelines," he said in an interview.


Technology, Media & Telecom
Can ComScore Break Nielsen's Near-Monopoly On Ratings?

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Sep. 17 2018 — Advertising agencies are becoming increasingly frustrated with the inability of Nielsen Holdings PLC's Nielsen Media Research to convince the major media companies to embrace its new cross-platform measurement system, called Total Audience Measurement. This creates a huge opportunity for comScore Inc., formerly Rentrak.

ComScore is trying to reinvent itself following its delisting in 2017 — it was relisted June 1 — following an accounting scandal. The company's stock has fallen from $65 per share intraday on Aug. 17, 2015, to close at just $18.06 per share on Sept. 6. It currently has a total enterprise value of less than $1.2 billion, paltry in comparison to Nielsen Holdings' $12.9 billion.

In April, comScore named Bryan Wiener, previously executive chairman of Dentsu's digital media agency 360i LLC, as its CEO. On Sept. 5, the company announced that it hired Sarah Hofstetter to serve as president and head up commercial strategy, including sales and marketing.

Wiener and Hofstetter have worked together for two decades, most recently at 360i, where Hofstetter was CEO and chairwoman. The two executives' deep ties to the advertising community may be just what is needed to bring a competing cross-platform measurement system to the broadcast and cable network industries.

Cable network ad revenue grew for decades before stumbling, albeit modestly, during the last recession. More recently, despite a booming economy the cable network ad industry has faltered, in part due to cord cutting and cord shaving but also because current ratings do not include all of online viewing and out-of-home viewing.

Currently, the ratings only include online viewing within a three-day period, which includes the exact same commercial load as linear. Many media companies do not believe that online viewers will tolerate the huge ad load that exists on linear TV and do not include the same commercial pods that appear on linear TV when serving up the shows online.

Although negotiations between Nielsen Media Research and the major media companies have been going on for some time, many in the industry are tired of the delays in adopting a new system and are looking at alternate ways to measure viewing.

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Technology, Media & Telecom
Most TV Everywhere Viewing Is Live TV In The Home

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Summary: subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers.

Sep. 17 2018 — Streaming live TV Everywhere to a mobile device inside the home is the TV Everywhere activity most often performed at 52% of multichannel TV respondents, according to data from Kagan’s MediaCensus online consumer survey.

While 58% of respondents surveyed in multichannel homes viewed TV Everywhere in the last three months, just 46% did so out of their home. Click here for the full Kagan report.

Viewing live TV inside the home was not only the TV Everywhere activity performed by the most respondents; it was also the most frequently performed.

Subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers. Subscribers to some operators are more likely to stream TV Everywhere content, with AT&T U-verse (64%) being the highest and WOW! (42%) the lowest among operator subscribers surveyed.

Younger subscribers, especially Millennials, were more likely to stream TV Everywhere content compared to older subscribers.

For more information about the terms of access to the raw data underlying this survey, please contact support@snl.com.

Data presented in this article is from the MediaCensus survey conducted in February 2018. The online survey included 20,035 U.S. internet adults matched by age and gender to the U.S. Census, with additional respondents subscribing to the top multichannel video operators in the U.S. The survey results have a margin of error of +/-0.7 ppts at the 95% confidence level. Generational segments are as follows: Gen Z: 18-20, Millennials: 21-37, Gen X: 38-52, Boomers/Seniors: 53+.

Consumer Insights is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

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Technology, Media & Telecom
Consumer Insights Online Video User Overview

Highlights

49% of survey respondents use more than one SVOD service.

Sep. 14 2018 — Data from Kagan’s U.S. online consumer surveys shows that 23% of respondents exclusively use one service, while almost half (49%) use more than one SVOD service. The service which is most commonly used exclusively is Netflix, while users of smaller services almost always use at least one other service.

Netflix is so universally used that it is both the most exclusively used service and the service most often used in conjunction with another service. In terms of demographics, Netflix users are very similar to the general population compared to smaller services that tend to have a younger user base.

With the exception of Netflix, most respondents indicated they have never subscribed to the top four services, including Netflix, Hulu, Amazon Prime Video and HBO NOW. Among those who indicated they dropped one of the top services, price was a principal reason for dropping, although content-specific reasons differed by service. Content is one of the most defining characteristics of online streaming services, which can be seen in the content viewed and most enjoyed on each service. In large part users of Netflix, Hulu and Amazon Prime Video most enjoy the content each service is known for.

A broader overview of this data was presented in a recent webcast.

Data presented in this blog is from U.S. Consumer Insights surveys conducted in September 2017 and March 2018. The online survey included 2,526 (2017) and 2,523 (2018) U.S. internet adults matched by age and gender to the U.S. Census. The survey results have a margin of error of +/-1.9 ppts at the 95% confidence level.

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Capital Markets
Public Companies Going Private

Sep. 14 2018 — The recent tweet from Elon Musk has understandably made big news, but it is worth pointing out that the appetite for taking public companies private has been a key area of activity this year. S&P Global Market Intelligence’s data shows that 2018YTD is already at 39% of 2017 numbers, standing at €17.8bn of deal value across 32 completed deals, globally. Going-private closed deal count is at a healthy 49% compared to full 2017 numbers.

In terms of most popular sectors for going-private deals, since 2013 - Information Technology has been leading the pack with €108.9bn of aggregate deal value recorded across 104 deals, while Consumer Discretionary* is trending as a distant second with €49.7bn of total deal value.

The top target location for going private deals is the US, and interestingly – China comes in at second place, with UK following. The three regions have seen total deal size of €218.8 during the period of 2013 through 2018YTD. The popularity of these locations is further supported by the fact that after going private, average target’s EBITDA values have increased compared to when those companies were public. The US-based going private targets grew their EBITDA by average of 56% since leaving the public market, while Chinese and the UK-located companies grew EBITDA by 10% and 38%, respectively. Overall, the going private moves proved to be successful for ex-public companies globally within the 2013 – 2018YTD deals’ time frame, where their average Net Income values grew by 58% while EBITDA values grew by a smaller but yet attractive 29%.

In terms of the deal pipeline, 18 going-private deals were announced globally since 1st January 2018 and would add €25.8bn of aggregate deal value to already closed €17.8bn.

The following was originally published on Angel News on August 16, 2018: Public companies going private, S&P Global comment

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