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1、Oil and GasINDUSTRY UPDATE|Q3 2022Table of ContentsPage1.Houlihan Lokey Snapshot82.Crude Oil123.Natural Gas and NGLs274.LNG405.Refining446.Public Equity Markets Overview567.M&A and Financing Activity588.Rigs662Dear Clients and Friends,Houlihan Lokey is pleased to present its Oil and Gas Industry Upd
2、ate for Q3 2022.We have included an overview of trends in the oil and gas industry,commodity pricing,public capital markets,M&A,A&D,and financing activity along with key data to help you stay ahead in our dynamic and constantly evolving industry.We hope you find this quarterly update to be informati
3、ve and that it serves as a valuable resource to you in staying abreast of the market.If there is additional content you would find useful for future updates,please dont hesitate to call or email us with your suggestions.We look forward to staying in touch with you.Regards,Michael RobertsManaging Dir
4、ectorMRobertsHL.com832.319.5141Brett LowreyManaging DirectorBLowreyHL.com214.220.8480Josh EavesManaging DirectorJEavesHL.com212.497.4273Manuel AmaroDirectorMAmaroHL.com832.319.5159Additional Oil&Gas Group ContactsRobert TeigmanManaging DirectorOil&Gas Valuation and Board Advisory1001 Fannin Street,S
5、uite 4650Houston,TX 77002RTeigmanHL.com832.319.5138J.P.HansonManaging DirectorGlobal Head,Oil&Gas1001 Fannin Street,Suite 4650Houston,TX 77002JHansonHL.com832.319.5115Daniel CrowleyManaging DirectorDCrowleyHL.com917.757.6639Chris SweetManaging DirectorCSweetHL.com832.319.5140Jerry EumontDirector,Geo
6、logistJEumontHL.com832.319.5119Russell MasonManaging DirectorRMasonHL.com214.665.8622Javier ArtolaManaging DirectorJArtolaHL.com832.319.5110Shane SealyManaging DirectorSSealyHL.com832.319.5133Brad BucherSenior Vice PresidentBBucherHL.com832.319.5161Braxton KnoppSenior Vice PresidentBKnoppHL.com832.3
7、19.5170Jeremy LowManaging DirectorJLowHL.com+44.20.7907.4241Anton PismenyukSenior Vice PresidentAPismenyukHL.com832.319.5167Manny VediSenior Vice PresidentMVediHL.com832.319.5135Briklynd BriggsDirectorBriklynd.B832.319.5191Mukul HariharanDirectorMHariharanHL.com832.319.5145Tom CarlsonManaging Direct
8、orTCarlsonHL.com832.319.5183Rouzbeh FazlinejadManaging Director Rouzbeh.FazlinejadHL.com+971.4.526.3714Arun ReddyManaging DirectorAReddyHL.com+971.4.526.37053Houlihan Lokey Oil and Gas Update(1)The Wall Street Journal.(2)Source:S&P Global.Oil Supply/Demand DynamicsWTI prices through Q3 22 continued
9、to be volatile as market participants weigh the probability(and depth)of a global recession vs.tight global supply dynamics.Recent volatility has largely affected the front of the curve,and tail prices have remained steadily above$65,a level that still supports both production and upside development
10、.On October 5,2022,OPEC+agreed to cut oil production by 2 MMbbls/d,framing the decision as a technical response to a lackluster global economic outlook,especially in China,where COVID-19 restrictions have hurt oil demand.(1)Additionally,the cartel noted a disconnect between paper and physical market
11、s that was sending erroneous signals to the broader market.OECD inventory levels are well below historical five-year trend levels,particularly as OECD countries have released barrels from storage(e.g.,U.S.SPR)in an effort to tame escalating gasoline prices.Depressed oil prices during the last down c
12、ycle and the Upstream sectors broad current focus on returning capital to shareholders have contributed to an environment of underinvestment in exploration and development globally.Russian oil supply dynamics continue to have a material effect on global crude prices.In 2021,European imports of Russi
13、an production averaged 3.1 MMbbls/d of crude oil,natural gas liquids,and refinery feedstocks,plus 1.3 MMbbls/d in diesel and other petroleum products.On November 4,2022,the European Union,G7,and Australia agreed to set a to-be-determined price cap on each cargo of seaborne Russian oil.In effect star
14、ting December 5,2022,a price cap of$60/bbl was instituted;the impact on global trading flows and resulting prices are yet to be analyzed.As such,businesses in each of the supporting countries are barred from shipping,financing,and insuring Russian oil cargoes,unless it is below the prevailing price
15、cap.Russian seaborne crude exports fell to a 12-month low in September(2)as European buyers continued to wind down purchases as sanctions are being implemented.Previously,on June 3,2022,the EU adopted sanctions banning seaborne imports of Russian crude oil as of December 5,2022,and petroleum product
16、 imports as of February 5,2023,with certain exceptions.Russian crude flows have generally shifted to those countries against sanctions(away from those in support);China,India,and Turkey have emerged as key destinations for Russian crude,somewhat muting the intended effect of the Western sanctions.4K
17、ey Quarterly TrendsNatural Gas Supply/Demand Dynamics Even prior to the Russian invasion of Ukraine,European natural gas supply was“tight to under-supplied”relative to demand.Despite Russias attempt to weaponize its natural gas supply,TTF prices have declined by 62.5%(3)from their peak observed on A
18、ugust 26,2022,largely driven by(i)alternative fuel sources identified(coal,wood,nuclear,renewables),(ii)the resulting build in natural gas inventories,and(iii)a weather forecast of moderate winter temperatures.The EU has been focused on increasing its natural gas inventories in advance of winter dem
19、and and was 94.7%full as of October 29,2022.(4)In order to reduce its member states reliance on Russian energy,in July 2022,the EU unveiled a European Gas Demand Reduction Plan to cut members gas use from August 2022 through March 2023 by 15%vs.their 20172021 average consumption levels.Dozens of LNG
20、 tankers are floating offshore of European ports due to a lack of berths capable of offloading LNG and storage availability.Weather is a key factor going forward,as a cold,dry,and windless European winter could deplete gas inventories and hinder wind-power generation,while a mild,wet,and windy winte
21、r could help moderate gas demand and boost wind power.On September 26,2022,explosions rocked the Nord Stream pipeline and one of the two Nord Stream 2 pipelines.Previously,in August 2022,Gazprom halted all Nord Stream gas flows,citing technical problems and Western sanctions.Nord Stream 2,a newer pi
22、peline built alongside the older Nord Stream one,has been operational since last year but was never put to use as Germany refused to certify the pipeline in response to Russias invasion of Ukraine.Significant TTF and JKM vs.HH differentials have incentivized U.S.LNG exporters to max out current capa
23、city and consider establishing new export terminals,which typically take five or more years to construct post permitting and FID.As of July 2022,U.S.LNG liquefaction capacity averaged 11.4 Bcf/d,with a shorter-term peak capacity of 13.9 Bcf/d.As further mentioned below,the June 2022 fire at Freeport
24、 LNG reduced daily U.S.LNG export by 2 Bcf/dFreeport LNG has reportedly postponed the expected restart of its 2 Bcf/d terminal to Q1 23 as it completes certain repairs,following which it will seek regulatory approvals.Freeport LNG had previously aimed to restore greater than 85%of its capacity in No
25、vember 2022.The facility was closed in June 2022 due to an inbound pipeline rupture and subsequent fire.5Key Quarterly Trends(cont.)(3)Source:Bloomberg.As of November 1,2022.(4)Source:GIE Aggregated Gas Storage Inventory.Natural Gas Supply/Demand Dynamics(cont.)The most recent U.S.LNG export project
26、,Calcasieu Pass LNG,placed all of its liquefaction trains(1.3 bcf/d)in service in August 2022,ahead of schedule.In addition to Golden Pass LNG,which started construction in 2019,two more projects(Plaquemines LNG and Corpus Christi Stage III)on the U.S.Gulf Coast have recently begun construction.Once
27、 completed,the three export projects under construction will expand U.S.LNG peak export capacity by a combined 5.7 Bcf/d by 2025.(5)M&A&D MarketsThe M&A&D market remains very active,with$16 billion of reported transaction value in Q3 22(vs.$12 billion in Q2 22).Transaction activity has been supporte
28、d by(i)the“seasoning”of robust commodity price levels and(ii)the recent flattening of the forward curves.However,commodity price volatility has recently negatively impacted closings such that YTD 2022 closings are materially behind 2021,notwithstanding higher relative activity levels.Public E&Ps hav
29、e driven deal closings,accounting for 78.5%of YTD acquisitions by deal value.Public equity markets have been receptive to M&A&D,including equity-funded consideration.An additional impediment to dealmaking includes producers large out-of-the-money hedge books(which negatively impacts net proceeds to
30、sellers),many of which are rolling off in 1H 23.6Debt Capital MarketsE&P HY issuances reached record levels in 2021 and have reverted to more subdued levels YTD,due in large part to macroeconomic/recessionary concerns.HY issuances were$15.8 billion YTD 2021 vs.$3.4 billion YTD 2022.Energy High Yield
31、 index OAS spreads have remained significantly tighter compared to the broader High Yield index.As of September 30,2022,the Energy High Yield index spread was 466 bps(up 27.3%vs.Q3 21)compared to the broader High Yield index spread of 573 bps(up 85.4%since Q3 21).RBLs have become more constructive i
32、n recent quarters but remain highly selective.Key Quarterly Trends(cont.)(5)Source:EIA.Selected Upstream Metrics($in billions)Percent Change(Q3-22 vs.)Q3-21Q2-22Q3-22Q3-21Q2-22A&DAmount$13.0$6.1$9.1-29.8%49.9%Transactions1127359-47.3%-19.2%M&AAmount$5.6$6.0$6.922.8%14.0%Transactions866-25.0%0.0%Debt
33、 Capital Markets(cont.)Private credit markets have been very active,including with respect to dividend recaps(especially via securitizations and VPPs),development capital,and acquisition financing.Sellers have increasingly explored dividend recaps(e.g.,via securitizations and VPPs)as a partial monet
34、ization mechanism in lieu of outright asset sales.Equity Capital MarketsAs of November 15,2022,the S&P E&P Index was the best-performing sector YTD,up 71.5%vs.16.2%for the broader S&P 500.(6)Energy currently comprises 5.4%of the S&P 500 market cap,up from$1BTotal Annual Deal Value$92$58$108$35$72$72
35、$86$96$52$67$42020040060080000$0$20$40$60$80$100$2000202021YTD2022CorporateAssetTotal Deal Count60OFSM&A(Deal Count)M&A2022($in billions)M&A2022(Deal Count)M&A($in billions)Note:All data as of September 30,2022.Source:Enverus based on selection
36、criteria of seller headquarters being located in the U.S.Drilling and Completion31%Production Operations45%Integrated24%Drilling and Completion27%Production Operations47%Information Services14%Integrated12%61YTD SeptemberSegment2020202120212022%Drilling and Completion$0.2$0.8$0.2$0.231%Production Op
37、erations0.70.70.50.3-35%Information Services0.00.00.00.0NMFIntegrated0.00.80.70.2-75%Other0.00.00.00.0NMFTotal$0.8$2.3$1.30.7-48%YTD SeptemberSegment2020202120212022%Drilling and Completion$0.2$0.8$0.2$0.231%Production Operations0.70.70.50.3-35%Information Services0.00.00.00.0NMFIntegrated0.00.80.70
38、.2-75%Other0.00.00.00.0NMFTotal$0.8$2.3$1.30.7-48%DownstreamM&A($in billions)M&A(Deal Count)M&A2022($in billions)M&A2022(Deal Count)Note:All data as of September 30,2022.Source:Enverus based on selection criteria of seller headquarters being located in the U.S.Refining4%Multiple18%Distribution and R
39、etail58%Terminals/Storage6%Shipping14%Refining2%Multiple3%Distribution and Retail74%Terminals/Storage7%Shipping14%YTD SeptemberSegment2020202120212022%Refining$0.3$0.1$0.0$0.2NMFMultiple0.74.44.41.1-76%Distribution and Retail22.96.25.43.5-35%Terminals/Storage4.21.51.40.4-74%Shipping0.50.10.10.8NMFTo
40、tal$28.7$12.2$11.3$6.0-47%YTD SeptemberSegment2020202120212022%Refining2101NMFMultiple4852-60%Distribution and Retail49754543-4%Terminals/Storage1212104-60%Shipping4448100%Total711006458-9%62MidstreamM&A($in billions)M&A(Deal Count)M&A2022($in billions)M&A2022(Deal Count)Note:All data as of Septembe
41、r 30,2022.Source:Enverus based on selection criteria of seller headquarters being located in the U.S.Multiple43%Gathering/Processing49%Pipelines8%Oil Tankers0.5%Multiple25%Gathering/Processing56%Pipelines17%Oil Tankers3%YTD SeptemberSegment2020202120212022%Multiple15.230.822.510.0-56%Gathering/Proce
42、ssing1.62.90.811.2NMFGas Processing0.00.00.00.0NMFPipelines3.51.61.21.849%Oil Tankers0.11.01.00.1-89%Storage0.40.90.90.0-100%Total$20.8$37.2$26.4$23.1-12%YTD SeptemberSegment2020202120212022%Multiple916129-25%Gathering/Processing%Gas Processing0000NMFPipelines111176-14%Oil Tankers3221-50%
43、Storage4220-100%Total434833369%63Financing by InstrumentFinancing by Instrument($in billions)Financing by InstrumentYTD 2022($in billions)Notes:All data as of September 30,2022.Current year may not include values for all announced transactions or findings.Historical amounts may be adjusted as additi
44、onal information is available.Source:Enverus.$48.5$20.6$72.8$22.5$8.6-$5.00$5.00$15.00$25.00$35.00$45.00$55.00$65.00$75.00UpstreamServicesMidstreamDownstreamIntegratedEquityCredit FacilityLoanBondOther64YTD SeptemberCapital2020202120212022%UpstreamEquity$1.1$1.4$0.8$0.0NMFCredit Facility46.145.021.7
45、41.190%Loan12.72.50.70.5NMFBond32.930.323.96.8-72%Other0.10.50.50.1NMFTotal$92.9$79.6$47.6$48.52%ServicesEquity$0.0$0.5$0.2$0.4NMFCredit Facility18.67.54.615.7242%Loan5.86.43.74.214%Bond6.67.33.50.2-93%Other0.20.60.60.0NMFTotal$31.1$22.3$12.6$20.664%MidstreamEquity$2.9$1.2$1.2$0.0-100%Credit Facilit
46、y28.441.029.044.152%Loan6.12.41.48.8552%Bond43.929.423.318.8-19%Other2.61.71.51.0-33%Total$84.0$75.7$56.4$72.829%DownstreamEquity$0.0$0.1$0.1$0.0NMFCredit Facility8.74.74.121.3418%Loan1.30.90.60.2NMFBond15.66.43.21.0-69%Other0.00.00.00.0NMFTotal$25.6$12.1$8.0$22.5182%IntegratedEquity$1.1$0.8$0.0$0.6
47、NMFCredit Facility0.91.91.92.845%Loan0.71.41.40.0-100%Bond73.113.711.25.3-53%Other1.50.20.20.0NMFTotal$77.3$18.0$14.8$8.6-42%Grand Total$310.9$207.9$139.3$173.024%Financing by InstrumentYTD 2022(Deal Count)Financing by Instrument(cont.)Financing by Instrument(Count)Notes:All data as of September 30,
48、2022.Current year may not include values for all announced transactions or findings.Historical amounts may be adjusted as additional information is available.Source:Enverus.596468100UpstreamServicesMidstreamDownstreamIntegratedEquityCredit FacilityLoanBondOther65YTD SeptemberCapital202020
49、2120212022%UpstreamEquity121490-100%Credit Facility69482246109%Loan28952-60%Bond47493910-74%Other2761-83%Total1581278159-27%ServicesEquity2965-17%Credit Facility6240283939%Loan332315150%Bond1616103-70%Other61082-75%Total119986764-4%MidstreamEquity6540NMFCredit Facility2538233135%Loan1265740%Bond5941
50、29290%Other61091-89%Total1081007068-3%DownstreamEquity0110NMFCredit Facility9981475%Loan4641NMFBond25952-60%Other1000NMFTotal39251817-6%IntegratedEquity2102NMFCredit Facility2336NMFLoan2330NMFBond6518157-53%Other2110NMFTotal73262215-32%Grand Total497376258223-14%Page1.Houlihan Lokey Snapshot82.Crude
51、 Oil123.Natural Gas and NGLs274.LNG405.Refining446.Public Equity Markets Overview567.M&A and Financing Activity588.Rigs66RigsTotal U.S.vs.Canada RigsU.S.Rig Counts by Vertical,Horizontal,and DirectionalNotes:All data as of September 30,2022.Data collected on a weekly basis.Source:Bloomberg.020040060
52、08001,0001,2009/173/189/183/199/193/209/203/219/213/229/22Total U.S.Total Canada005006007008009001,0009/173/189/183/199/193/209/203/219/213/229/22Vertical Rig CountHorizontal Rig CountDirectional Rig Count67Rigs(cont.)U.S.Rigs by RegionsChange in Rig CountsRegion9/30/20229/30/20216/30/202
53、2YoY%ChangeQoQ%ChangePermian34426034932.3%-1.4%Eagle Ford72377294.6%0.0%Williston39233869.6%2.6%Marcellus39263950.0%0.0%Cana Woodford26203230.0%-18.8%DJ Niobrara17121641.7%6.3%Granite Walsh632100.0%NMFHaynesville71476951.1%2.9%Utica101212-16.7%-16.7%Rest of U.S.1418112474.1%13.7%Total76552175346.8%1
54、.6%Notes:All data as of September 30,2022.Data collected on a weekly basis.Source:Bloomberg.005006009/173/189/183/199/193/209/203/219/213/229/22PermianEagle FordWillistonAppalachiaRest of U.S.68Rigs(cont.)Total U.S.DUCsTotal DUCs by BasinNotes:All data as of September 30,2022.Data collect
55、ed on a monthly basis and subject to a one-month lag.Source:Bloomberg.01,0002,0003,0004,0005,0006,0007,0008,0009,00010,0009/173/189/183/199/193/209/203/219/213/229/22Total DUCS05001,0001,5002,0002,5003,0003,5004,0009/173/189/183/199/193/209/203/219/213/229/22PermianAppalachiaAnadarkoBakkenEagle Ford
56、HaynesvilleNiobrara69About Houlihan LokeyHoulihan Lokey(NYSE:HLI)is a global investment bank with expertise in mergers and acquisitions,capitalmarkets,financial restructuring,and financial and valuation advisory.The firm serves corporations,institutions,and governments worldwide with offices in the
57、United States,Europe,the Middle East,and the Asia-Pacific region.Independent advice and intellectual rigor are hallmarks of the firms commitment to client success across its advisory services.Houlihan Lokey is the No.1 investment bank for all global M&A transactions,the No.1 M&A advisor for the past
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70、ers its data from sources it considers reliable;however,it does not guarantee the accuracy or completeness of the information provided within this presentation.The material presented reflects information known to the authors at the time this presentation was written,and this information is subject t
71、o change.Houlihan Lokey makes no representations or warranties,expressed or implied,regarding the accuracy of this material.The views expressed in this material accurately reflect the personal views of the authors regarding the subject securities and issuers and do not necessarily coincide with thos
72、e of Houlihan Lokey.Officers,directors,and partners in the Houlihan Lokey group of companies may have positions in the securities of the companies discussed.This presentation does not constitute advice or a recommendation,offer,or solicitation with respect to the securities of any company discussed
73、herein,is not intended to provide information upon which to base an investment decision,and should not be construed as such.Houlihan Lokey or its affiliates may from time to time provide investment banking or related services to these companies.Like all Houlihan Lokey employees,the authors of this presentation receive compensation that is affected by overall firm profitability.71Corporate Finance Financial RestructuringFinancial and Valuation AdvisoryHL.com