Energy: Oil & Gas - Bahamas Petroleum Company Plc

More documents

Recommendations

Info

November 5, 2010 Europe: Energy: Oil & Gas - E&P M&A: Focus on core value in geographically concentrated areas We believe that industry acquirers typically prefer to purchase discovered resource over exploration. Of the three acquisitions in our E&P coverage universe over the last three years (Burren, Venture and Dana), the average ratio of core value to total risked NAV was c.86%. We would also regard geographical concentration as an advantage (another characteristic of the three transactions), allowing a purchaser a less complicated portfolio, with the advantage of potential operational and fiscal synergies. Our M&A screen therefore includes companies which combine potential upside to our core valuations of greater than 30% to the current share price and which have at least 95% of their value in a single region. Stocks in our M&A screen are Amerisur, Global Energy Development, Northern Petroleum, Norse Energy, Det Norske, Nighthawk Energy, Great Eastern Energy, Bankers Petroleum, IGas and Green Dragon. Note that throughout this report, our analysis of price versus core value excludes assumed equity raises, strategic premiums, liquidity discounts, and options. Exhibit 12: Upside to core value an attraction for corporate acquirers Potential upside/downside to core valuations, excluding adjustments Upside to core value 300% 250% 200% 150% 100% 50% 0% ‐50% ‐100% ‐150% Global Energy Development Igas Nighthawk Energy Panoro Northern Petroleum Norse Energy Det Norske Amerisur Great Eastern Energy Bankers petroleum Green Dragon Maurel & Prom Valiant Petroleum Aminex Plc Nautical Petroleum Bowleven Enquest Ithaca Dragon Oil Faroe Petroleum Soco Coastal Energy Rockhopper PA Resources Regal Premier Oil Gulfsands Salamander Dana Petroleum Melrose Resources Aurelian Serica Heritage Oil JKX Noreco Lundin Petroleum Tullow Encore Cove Energy Hardy Oil DNO Sterling Energy Dominion Gulf Keystone Borders and Southern Falkland Oil & Gas Tower Resources BPC Chariot Oil & Gas Desire Petroleum Max Petroleum Source: Goldman Sachs Research estimates, Bloomberg. Exhibit 13: Geographical concentration of discovered resource also a positive % concentration in largest geographical area (excluding exploration) Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 12 % value in a single region 120% 100% 80% 60% 40% 20% 0% Faroe Petroleum Rockhopper Max Petroleum Noreco Bowleven Coastal Energy Green Dragon Bankers petroleum Hardy Oil Chariot Oil & Gas Global Energy Development Norse Energy Enquest Nighthawk Energy Ithaca Great Eastern Energy Igas Dragon Oil Amerisur Salamander Valiant Petroleum Aurelian Borders and Southern Desire Petroleum Falkland Oil & Gas Dominion BPC Nautical Petroleum Det Norske Encore Gulf Keystone Cove Energy Northern Petroleum JKX Soco Regal Maurel & Prom DNO Tower Resources Gulfsands Lundin Petroleum Dana Petroleum Tullow Sterling Energy Heritage Oil Panoro Serica Aminex Plc Premier Oil PA Resources Melrose Resources
November 5, 2010 Europe: Energy: Oil & Gas - E&P M&A: Unrealised potential – buy large assets owned by small companies We see substantial upside potential in small stocks which hold significant assets, even after adjusting for liquidity, as we believe that the market is generally only willing to give value for the development potential offered by the current holder of the asset. However, if true, this would leave an arbitrage opportunity for larger companies with more funding power to realize more value from the asset by injecting additional capital up front in order to bring forward the timings of incoming cash flows significantly. We give companies in the unrealized potential screen risked M&A upside potential in which part of our valuation represents the value of the asset assuming a higher capital injection and, consequently, a higher NPV for the asset. Our Unrealised Potential screen contains IGas, GED, Norse, Nighthawk and Great Eastern. Exhibit 14: Greater capital input up front results in higher cash flows in the medium term… Indicative cash flows from US oil shale asset assuming different levels of initial capital input US$ (mn) 140 120 100 80 60 40 20 0 ‐20 ‐40 ‐60 1 2 3 4 5 6 7 8 9 10 11 Source: Goldman Sachs Research estimates. Year # Constrained net cash flow profile Unconstrained net cash flow profile Exhibit 15: … Leading to greater NPV for small companies’ assets Difference in company valuations based on slow vs. fast ramp-ups Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 13 Percentage uplift 140% 120% 100% 80% 60% 40% 20% 0% GED Norse Igas Nighthawk Great Eastern Constrained valuation
Page 1 and 2: November 5, 2010 Europe: Energy: Oi
Page 11: November 5, 2010 Europe: Energy: Oi
Page 63 and 64:
November 5, 2010 Europe: Energy: Oi
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
Page 271 and 272:
Page 273 and 274:
Page 275 and 276:
Page 277 and 278:
Page 279 and 280:
Page 281 and 282:
Page 283 and 284:
Page 285 and 286:
Page 287 and 288:
Page 289:
show all

Energy: Oil & Gas - Bahamas Petroleum Company Plc

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?