TPH sees potential for more M&A deals in West Texas

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

TPH sees potential for more M&A deals in West Texas

Post by dan_s »

From the TPH Morning Report on April 11:

North American Upstream From the Road
M&A (or lack thereof) a continued heavy focus

Two days marketing in our Houston backyard and a jaunt through Chicago featured a continued heavy focus on the potential for M&A in the Permian following our initiation of coverage on CVX/XOM. Investors continue to point to the relative valuation gap between the integrateds vs. both (small and mid-caps) SMID and large cap US as presenting quality opportunities for accretive M&A, with the potential for SMID pairings to drive value via G&A synergies. Given the recent run in headline crude, relative underperformance of favored E&Ps vs. integrateds and how the gap is closed/reversed a healthy focus, with some pointing to the 2020+ FCF inflection as a possible catalyst. Outside of the US, the latest updates on the Canadian crude macro setup featured in a number of conversations (AECO less so), with our outlook for rail and the various pipeline expansions and resulting differentials as top of mind.
------------------------
IMO a lot of our Sweet 16 and Small-Cap Portfolio companies are prime takeover targets. As I mentioned in the newsletter, there are rumors that CRZO and SM are talking about a merger. OAS also mentioned.
Dan Steffens
Energy Prospectus Group
Post Reply