PrivateEquity

Crude Oil Production, North America (BI OILSN)
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Themes > Will PE Pounce on Energy in 2015? >> Exhibit 1 of 7
Private Equity Stalks E&Ps With Billions to Vie for Fewer Deals
Analysts: Vincent G Piazza & Gurpal Dosanjh
Apr 16, 2015
Expectations for M&A involving
exploration and production
companies may be too high, given
that debt and equity markets remain
open for them to finance their
capital-intensive operations even
after oil and gas prices plunged. The
decline in E&P equities has helped
to draw the attention of private
equity firms, which have raised
billions of dollars to buy energy
companies and assets. Those
that do occur may push valuations
higher for purchasers, with private
equity and strategic bidders pitted
against each other.
Key Points (5 of 7):
* Private Equity Funds Amassing War Chest to Chase Energy
Deals
* Where in Energy Will the Private Equity Money Go? Maybe Not
Far
* E&P's Credit-Market Access Will Determine Whether M&A Picks
Up
* Competition May Make U.S. E&P Deals Pricey, Assuming They
Happen
* Free-Flowing Capital Keeps Oil Pumping, Even for Distressed
E&Ps
Crude Oil Production Team
Bloomberg Intelligence


Private Equity Funds Amassing War Chest to Chase Energy Deals
Apr 16, 2015
Energy companies will likely
draw the interest of private equity
investors while oil and gas prices
are depressed. Funds have raised
about $70 billion for deals, which will
affect valuations as they compete
with other financial sponsors and
energy companies. Their access to
capital, operating acumen and ability
to recycle investments in liquid
markets allows funds to maintain a
critical role by purchasing assets,
investing at different levels of a
target's capital structure or buying
operating companies outright.

Crude Oil Production Team For interactive exhibit on Bloomberg, run:
Bloomberg Intelligence PEFR<GO>


Where in Energy Will the Private Equity Money Go? Maybe Not Far
Apr 16, 2015
Private equity funds are seeking
to raise more than $126 billion to
invest across sectors including
energy in addition to $70 billion
already committed by investors.
Opportunities to deploy that capital
may be limited if credit markets
remain open to E&Ps, given that
producers have been able to finance
themselves as they await a recovery
in oil and gas prices. Fewer assets
for sale will restrict private equity
purchases and lead prices to rise
among competition from buyers.

Bloomberg Intelligence PEFR<GO>


E&Ps' Credit-Market Access Will Determine Whether M&A Picks Up
Analysts: Vincent G Piazza & Spencer Cutter
Apr 15, 2015
The plunge in oil and gas prices
hasn't prevented E&Ps from raising
debt, and while several producers
have cut capacity, the industry
overall seems to be weathering the
down cycle better than anticipated.
Credit is the lifeblood of capital-
intensive E&Ps and a decline in its
availability would force companies
to seek alternative financing, sell
assets or place themselves up
for sale. With access to credit
markets still relatively robust, M&A
may remain at less-than-expected
levels.
Additional Reading:
* Credit Should Still Be There for E&Ps Even With Oil Price Plunge
* High-Yield Energy Bond Offerings Approached $9 Billion in March
* Antero Resources, Newfield Sell Debt, Timing Bond-Market
Rebound
* BreitBurn Deal Lifts Distressed-Energy Issuance to $4.3 Billion
Crude Oil Production Team
Bloomberg Intelligence


Smart-Money Private Equity May Not Be Good for Public Investors
Apr 16, 2015
Private equity funds have partially
exited energy investments through
equity offerings worth $7 billion
in the past year. Those equities
have lost 20% on average, trailing
the S&P 500's 16% gain and the
Energy Select Sector SPDR Fund
ETF's 11% drop. Private equity's
performance can influence investor
perception of future deals and
may limit capital raising. Selling
investments via public markets
or private auction allows funds to
recycle capital and provide a return
for themselves and their investors.

Bloomberg Intelligence IPO T:5992631034824360010<GO>


Competition May Make U.S. E&P Deals Pricey, Assuming They Happen
Apr 16, 2015
The precipitous decline in crude oil
and natural gas prices should reset
expectations of potential buyers and
sellers in E&P deals. Yet valuations
suggest that either fewer deals
will occur or multiples will retreat
further, given that equities across
the three main U.S. oil-levered
plays still trade near where they did
when oil and gas were higher. While
M&A will likely center on distressed
companies, liquidity for deals may
outstrip the assets available, stoking
competition and pulling bid prices
higher.

Bloomberg Intelligence MA T:5995488858771816713<GO>


Free-Flowing Capital Keeps Oil Pumping, Even for Distressed E&Ps
Apr 16, 2015
The pace of domestic hydrocarbon
production may be more resilient
than expected, as E&Ps seek
operational efficiencies and other
cost savings that should generate
higher returns and more productive
wells. Liquid capital markets are
supporting this level of activity,
and even distressed operators
have obtained financing during the
latest slump in oil and gas prices.
That is keeping output robust and
suppressing commodity benchmark
prices. Once capital is rationed,
retreating output should support
prices.

Bloomberg Intelligence BI SERVG NM11 |1201-A-DATA|12||USD|R34144256,34275328<GO>

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