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E&Y - Oil and Gas Eye report - Q2 2013

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E&Y - Oil and Gas Eye report - Q2 2013 …

E&Y - Oil and Gas Eye report - Q2 2013
􀂝 EY’s Oil and Gas Eye Index fell by 12% over the second quarter of 2013, the largest quarterly drop
􀂝 As the global markets begin to show more stability, the divergence in performance of index

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  • 1. EY’s Oil and Gas Eye Index fell by 12% over the second quarter of 2013, the largest quarterly drop As the global markets begin to show more stability, the divergence in performance of index deliver and communicate exploration and commercial success that will crowd out the others in EY’s Oil and Gas Eye Index alternative investment market (AIM) oil and gas companies the index are reported in this Oil and Gas Eye also provides regular analysis and commentary on activity driving the The Oil and Gas Eye Index is constructed on the same assigned to the index levels AIM-listed oil and gas shares EY produces a similar Oil and Gas Eye contact Michael Simpson com; to receive copies Mining Eye contact Olivia Russell at Oil and Gas Eye Q2 2013
  • 2. | Oil and Gas Eye Oil and Gas Eye Q2 2013 in review Performance of the Oil and Gas Eye Index since 2008EYs Oil and Gas Eye Index fell by 12% over the second quarter of 2013, the largest fallen 11% since the start of 2013, wiping performance came as global equity markets Additionally, oil prices came under the midpoint of the year compared with crude prices temporarily fell below $100 However, junior oil and gas companies capital than available supply for oil and represents the lowest total oil and gas funds raised in a single quarter in four companies successfully raised capital in the We anticipate this trend will continue with investors being selective in the stocks they companies will be compelled to seek result in further consolidation in the AIM oil Group has made an offer to acquire Performance of the Oil and Gas Eye Index over Q2 2013 01Jan08 01Apr08 01Jul08 01Oct08 01Jan09 01Apr09 01Jul09 01Oct09 01Jan10 01Apr10 01Jul10 01Oct10 01Jan11 01Apr11 01Jul11 01Oct11 01Jan12 01Apr12 01Jul12 01Oct12 01Jan13 01Apr13 EY Oil and Gas Eye FTSE AIM All-Share (rebased) 400 900 1,400 1,900 2,400 2,900 3,400 Indexvalue EY’s Oil and Gas Eye FTSE AIM All-Share (rebased) Indexvalue 01Apr13 08Apr13 15Apr13 22Apr13 29Apr13 06May13 13May13 20May13 27May13 03Jun13 10Jun13 17Jun13 24Jun13 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600
  • 3. 3Oil and Gas Eye | As we predicted earlier in the year, against this challenging backdrop there has been a discerned shift in investor focus towards opportunities in Africa’s oil and gas sector was highlighted by the listing on AIM of Oil and gas funds raised as a proportion of total funds raised on AIM 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% %ofAIMfunds Oil and gas new issues (£m) Oil and gas further issues (£m) Oil and gas as % of all AIM (RH scale) Q22005 Q32005 Q42005 Q12006 Q22006 Q32006 Q42006 Q12007 Q22007 Q32007 Q42007 Q12008 Q22008 Q32008 Q42008 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q32012 Q42012 Q12013 Q22013 Q22012 0 200 400 600 800 1,000 1,200 Oilandgasfunds£m Nigeria and Namibia, raised £32m in May is not currently included in the Oil and Gas policy is to acquire or invest in businesses limited investment there will continue to be
  • 4. | Oil and Gas Eye be appointed as operator, of its two licence that it had relinquished its licences in Egdon Resources announced a series form part of the company’s strategy to In April, the company was awarded licences covering two offshore blocks adjacent to the North Yorkshire coast a 60% interest in an onshore licence in Just three months after listing on AIM, enter the Oil and Gas Eye Index at the end accelerate activity were also key growth Nighthawk Energy rose series of announcements about successful drilling activity, which added substantially expanded its immediate drilling plans to include two appraisal wells at the Arikaree increase production and cash generation and will enable the company to establish In June, IGas Energy announced that trillion cubic feet in its shale acreage in in this acreage is expected to commence later this year and will help the company Sound Oil announced that it had achieved the Europa Oil & Gas rose Risers in Q2 2013 increase revenues and pursue strategic deals the AIM oil and gas universe recorded Performance of the Oil and Gas Eye Index and oil price over Q2 2013 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 Indexvalue EY Oil and Gas Eye Brent crude (rebased) 01Apr13 08Apr13 15Apr13 22Apr13 29Apr13 06May13 13May13 20May13 27May13 03Jun13 10Jun13 17Jun13 24Jun13
  • 5. 5Oil and Gas Eye | In May, Petroceltic International commercial volumes of hydrocarbons and to trade on their respective Main of Lochard Energy and The Parkmead Group announced that they had reached agreement on the terms of a recommended Eye Index at the end of the second quarter following the acquisition of the company by Wessex Exploration fell hydrocarbon shows had been encountered second of a four well exploration drilling campaign that commenced in 2012 to price of Northern Petroleum Another company to suffer disappointing drilling results was New World Oil and Gas of hydrocarbons were found in the Rio As a result, the company has decided to In April, Kea Petroleum announced that the Mauku 1 well in New Zealand had failed to intersect any hydrocarbon pay and consequently it will be plugged Fallers in Q2 2013 suffer operational and deal setbacks in the AIM oil and gas universe Performance of the Oil and Gas Eye Index and FTSE 350 Oil and Gas Producers Index EY Oil and Gas Eye FTSE 350 Oil and Gas Producers (rebased) 01Apr13 08Apr13 15Apr13 22Apr13 29Apr13 06May13 13May13 20May13 27May13 03Jun13 10Jun13 17Jun13 24Jun13 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 Indexvalue
  • 6. 6 | Oil and Gas Eye Main market oil and gas movers listed on the Main market were impacted by the wider equity market volatility and Energy’s share price fell by 31% over the company announced that the North had been suspended before reaching planned total depth after encountering of not being able to test the prospect fully and safely without the use of specialist time taken to import the equipment into Indonesia prevented an immediate return Oil is involved in a number of legal proceedings in connection with the sale of arbitration tribunal ruled in April that the determination of tax was outside its jurisdiction, but that there were two areas In June, Heritage Oil announced that, in Oil and Heritage, the court had awarded company announced that it had agreed to Share price movements of FTSE 350 Oil and Gas Producers over Q2 2013 announced that its revenues had decreased primarily due to a decrease in condensate to a three year extension, and a two year interest payment holiday, on their 0% -5% -10% -15% -20% -25% -30% -35% Enquest PremierOil SalamanderEnergy Afren OphirEnergy CairnEnergy TullowOil HeritageOil Ruspetro RoyalDutchShellB BGGroup BP RoyalDutchShellA SocoInternational EssarEnergy
  • 7. 7Oil and Gas Eye | Quarterly trend of funds raised on AIM: oil and gas, and all sectors Ins and outs of the AIM oil and gas universe strong at the end of the second quarter, on AIM following the successful completion which was formed in 2010, intends to suspended from trading on AIM in May new issues by all companies listed on AIM 2013, 69% higher than the total for the on AIM in April following the completion of the acquisition of the company by In June, Woburn Energy completed the change of business, which resulted in Woburn Energy becoming an investing company, Woburn Energy was required to substantially implement its investing policy or concluded a reverse takeover on or and shares in the company were suspended AllAIMfunds£m 0 200 400 600 800 1,000 1,200 Oilandgasfunds£m Oil and gas new issues (£m) Oil and gas further issues (£m) All AIM total funds (£m) (RH scale) Q22005 Q32005 Q42005 Q12006 Q22006 Q32006 Q42006 Q12007 Q22007 Q32007 Q42007 Q12008 Q22008 Q32008 Q42008 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
  • 8. | Oil and Gas Eye return of volatility in equity markets and downward pressure on oil prices combined on AIM in the second quarter was just in the previous quarter and represented the lowest amount raised in a quarter wider AIM market improved slightly in the 21% higher than the total in the previous quarter and 19% higher than the total for were successful in raising funds in the As one of the conditions of its proposed merger with Australian Range Resources operational and working capital will use these monies to repay debt and New World Oil and Gas successfully proceeds of the placing were in part analysis of the drilling results, the company announced that the well was has decided to plug and abandon the Oil and gas funds raised on AIM and the Main Market (£m) Secondary fund-raising plummets in Q2 Alkane Energy raised gross proceeds company plans to use the funds raised Marine seismic operations company Thalassa Holdings raised gross purchase additional seismic acquisition equipment and provide the company also broadening the institutional In May, Kea Petroleum successfully proceeds of the placing will be used to fund the construction of new production facilities for the company’s Additionally, the funds will be used to as part of the company’s committed exploration work program for AIM Main Market AIM and Main Market New issues New issues 2012 Total 177.6 467.0 162.9 288.0 1,095.4 2011 Total 223.1 1,013.1 234.7 457.0 1,927.9 2010 Total 131.9 1,902.7 1,271.7 1,092.9 4,399.2
  • 9. Oil and Gas Eye | Q1 2013 MV £m 1,390 362 292 210 193 132 123 Exits Entrants Oil and gas constituents at start of each quarter Q3 2013 MV £m 223 122 Exits Entrants Q2 2013 MV £m 329 311 292 269 120 Exits Entrants
  • 10. | Oil and Gas Eye Funds raised on AIM to Q2 2013 New issues Oil and gas Oil and gas All AIM All AIM Oil and gas as % of all AIM Oil and gas as % of all AIM issues (£m) issues (£m) 1 11 1 23 3 20 1 3 33 2 23 2 2 1 31 0 1 2009 0 13 2006 20 2003 163 2002 6 161 2001 3 Further issues Oil and gas Oil and gas All AIM All AIM Oil and gas as % of all AIM Oil and gas as % of all AIM issues (£m) issues (£m) 96 61 102
  • 11. Oil and Gas Eye | Further issues Oil and gas Oil and gas All AIM All AIM Oil and gas as % of all AIM Oil and gas as % of all AIM 121 62 2009 262 2006 261 2003 2002 1,126 2001 39 1,026 Total issues Oil and gas Oil and gas All AIM All AIM Oil and gas as % of all AIM Oil and gas as % of all AIM issues (£m) issues (£m) 63 63 611 123 62 69 2009 262 2,631 3,263 2006 2003 1,636 2002 2001 1,203
  • 12. EY EY is a global leader in assurance, tax, transaction and build trust and confidence in the capital markets and in economies the building a better working world for our people, for our clients and for Further information Oil and Gas Eye, or any associated Jon Clark Ally Rule How EY’s Global Oil & Gas Center can help your business uncertain energy policies, geopolitical complexities, cost of more than 9,600 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory execute the mobility of our global resources and articulate points oilandgas, or contact Michael Simpson at msimpson2@uk.ey.com Oil and Gas Eye @EY_OilGas EY Global You can also connect with us using social media: Oil & Gas 2013 Global oil and gas tax guide Our annual guide provides information about a directory of our global oil and gas tax local tax legislation, which varies greatly from Andy Brogan Global Oil & Gas Transaction Advisory Leader Pip McCrostie Global Vice Chair Transaction Advisory Services The Capital Agenda Based around four dimensions, it helps companies consider their issues and challenges, understand their options and make more informed capital decisions. 1. Preserving capital: reshaping the operational and capital base 2. Optimizing capital: driving cash and working capital and managing the portfolio of assets 3. Raising capital: assessing future capital requirements and assessing funding sources 4. Investing capital: strengthening investment appraisal and transaction execution About this survey The Global Capital Con dence Barometer is a regular survey of senior executives from large companies around the world, conducted by the Economist Intelligence Unit (EIU). Our panel is comprised of select Ernst & Young clients and contacts, and regular EIU contributors. This snapshot of our ndings gauges corporate con dence in the economic outlook, and it identi es boardroom trends and practices in the way companies manage their Capital Agenda. Pro le of respondents Global Capital Con dence Oil & Gas con Key ndings for oil and gas More than 44% feel that the global economy is strongly or modestly improving, up sharply from just 27% six months ago. Con dence in the local economy is also up modestly. Credit market tightness is notably easing. The oil and gas M&A appetite is improving compared to six months ago. Our eighth Global Capital Con dence Barometer shows a clear rebound in corporate con dence. After years of conservative decision-making, executives are steadily trending toward an investing agenda. But are companies being bold enough? Expectations for global economic growth, corporate earnings and credit availability are at some of their highest levels in two years. Broader equity markets had a strong rst quarter of the year in just about all geographies. Normally, this positive sentiment would translate into signi cant capital investment and M&A activity. However, our respondents are gravitating toward lower-risk value-creation and growth strategies. The current situation can best be described as a con dence paradox — a disconnect between con dence and M&A activity. Before the nancial crisis, economic sentiment and M&A activity moved in harmony. However, in the “new normal” economy, these indicators are decoupled. Macroeconomic risks, such as the Eurozone crisis, US sequestration and slowing emerging markets growth, have given companies pause. Consequently, some of the world’s richest and most mature economies, which would be expected to lead a recovery, lack con dence within their borders, lowering appetite for capital investment worldwide. Valuation levels and sentiment suggest companies now face is a window of opportunity to seize rst-mover advantage in a market gaining momentum. History shows that rst movers in any economic cycle can create differential value and position themselves for sustained market leadership. Now is the time to invest and grow forward. Global oil and gas tax guide 2013

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