PLS comments from IPAA conference in SF

[dan_s]

Note that if the MLPs start buying up whole companies it could get very interesting. See comments by LINE below. - dan

This Market Alert provides several key takeaways from PLS staff attending last week's IPAA OGIS's conference in San Francisco. This annual West Coast event highlights small and micro-cap public E&P's. On Page 2 of this Market Alert, PLS provides a table of stock prices of all presenters -- notice the stock market has marked down the micro-caps the most, who are now trading on average 62% off their 52 week high.

Other notable themes include:

1.) Bakken: Northern Oil & Gas's non-op business model is working. The Company is the largest non-op of every operator in the Bakken -- thus is on top of the ball of Bakken economics, logistics and operators. The drill bit hits the ground for Northern every day. According to Northern, the real fun will begin when the play goes from drilling to hold lands to infill drilling, which has decades to run.

2.) Marcellus: Range Resources also presented and believes the best is yet to come for the Marcellus. Range and the industry have ability to ramp up but are currently managing the drilling programs in alignment with existing infrastructure -- drilling near a pipeline or processing plant. Once midstream catches up, Range and the industry will start aggressively drilling the best wells in the play.

3.) Valuations: In a Q&A breakout session, Linn Energy responded to analyst questions regarding next steps towards corporate acquisitions. According to Linn's EVP/CFO Kolja Rockov, "something is clearly wrong in valuations today." Linn is seeing asset deals trading at 7X EBITDA while 30 names on their radar are trading at 4.5X EBITDA. If Linn can buy a company and sell the non-core assets to pay for the deal, they are interested.

PLS highlights include Linn Energy, Panhandle O&G, Rex Energy, Range Resources, Southwestern Energy, Northern Oil & Gas, Dejour Energy, Stone Energy, Saratoga Resources and Pace Oil & Gas.


As a REMINDER, the PLS Dealmakers Prospect & Property Expo is back in Houston IN ONE WEEK on October 13th. This one-day event brings industry buyers and sellers together for a productive day of networking and deal shopping. Click here to sign up for a booth or a viewer pass. Booths start at $695 for clients. Viewer passes are $95 (Event day - $115 ).