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EV Energy Partners LP Message Board

  • artist_formerly_known_as_pooch artist_formerly_known_as_pooch Apr 18, 2013 9:15 AM Flag

    EV Finds Larger Appetite for Smaller Utica Asset Packages By Conway Irwin

    *** nice positive article for a change. last 2 paragraphs were odd though ****

    After turning down a purchase offer from a large company for a majority stake in more than 100,000 prospective Utica shale acres, upstream master limited partnership EV Energy Partners (EVEP) is finding that many of the buyers in the market have more of an appetite for smaller deals.

    EVEP has been marketing 103,800 acres in the Ohio portion of the Utica shale spanning black oil, light oil, wet gas and dry gas zones. But the company recently turned down an offer from a large prospective buyer, citing unacceptable deal terms.

    "We know the Utica," said executive chairman John Walker at the Independent Petroleum Association of America's Oil and Gas Investment Symposium in New York on Tuesday. "We know that it is increasing in value in the wet gas window, and we know what reasonable market terms and prices should be - we're not unreasonable in terms of expectation."

    Walker said the cash price offered by the large company, which was seeking an 85% interest in the Utica acreage, was acceptable, but other deal terms were not. "It becomes a situation where you are in partnership with someone for a very long period of time," he said. "We're not going to create a liability for ourselves."

    Though EVEP is still in discussions with the large buyer, its data room is open to other companies, as well. "We initiated discussions with other entities on smaller packages," Walker said. The company had initially offered the acreage in four packages, but has since broken it down on a county-by-county basis, meaning that it is being sold off in 13 separate pieces.

    These smaller packages have attracted buyers that might not otherwise have been interested. "By repackaging county-by-county, some of the counties might be worth $200-$300 million, and we're bringing in a whole new level of participants," Walker said. He added that some companies are interested in more than one county.

    "Some of the large folks

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    • Remainder artist did not get posted

      "Some of the large folks that originally seemed more interested in a big position are now actually interested in county-type positions," said chief financial officer Michael Mercer. "They're looking to add on to positions they have already." Many companies have said that they are always on the lookout for bolt-on asset purchases that complement their existing positions in US onshore plays.

      Walker indicated that while EVEP wants to execute a deal, it is not under pressure to accept a sub-optimal offer. "When we are able to reach an acceptable agreement with a party or parties that appreciate a large, high-quality HBP [held-by production] position as much as we do, we will sell it," he said. "Until that time, we will remain patient, and are participating in wells to enhance our overall position."

    • rbb40@bellsouth.net rbb40 Apr 18, 2013 12:03 PM Flag

      pooch/ace----something is missing here,2+2 is not=4 here---acceptable $$ offer--ok,--problem is obvious,buyer wants to control the future of the " GROUND ", --800MIL+/- BUY +BILLIONS spending drilling, buyer has a few coins @ stake here----there is a SOLUTION here if ego ( WALKER/HOUSER) tones down#$%$$ cure--buyer pays an impairment fee to ev for "loss of profit potential" from future drilling of clinton/medina &knox for a 5 yr period etc--not too hard to capex those numbers---+++ they are vertical wells on specified spacing,not a future problem---bye---

      Sentiment: Hold

      • 2 Replies to rbb40
      • akorber@ymail.com akorber Apr 18, 2013 3:08 PM Flag

        Why 2+2 does not = 4 ( everything is about blowing smoke )

        The only deal they are ever going to accept would be one from a major say EXXON if they were to step up with an offer that takes them out . Similar to what was done with TOTAL last year.

      • rbb40 -- your scenario fits what Walker seemed to be saying yesterday. But I think the solution would be even simpler and require no negotiation. EVEP should give the buyer any and all existing drilling location rights on all the leases. If EVEP wants to go back and drill future knox/clinton wells, they will negotiate with the landowners to get additional drilling rights. I don't know what you would have to give a landowner in eastern Ohio to get rights for an additional drilling pad but lets say it was $10000. (Remember, the landowner is motivated to get another well drilled because they will then get far more than $10K in royalty money.) If EVEP were to drill 1000 knox/clinton wells, this would cost then another $10 MM -- a pittance compared to the near billion dollar deal. Any reasonable seller should be willing to give on this point. The fact that (if your analysis is correct) EVEP has not ceded this point suggests it is merely an excuse to justify their failure. ("It's not OUR fault, we agreed with the buyer's price but then, that nasty buyer wanted too many operating rights.") One more thing -- if my recollection is correct, EVEP said they would not have another stock offering to pay for their expenditures on the gathering systems. Rather, they would use proceeds from the sale. If there is no sale by (my guess) the end of 3Q13, I would expect the sale of more stock with its resultant dilution.

    • its only stark or tusc. Id say stark at 6k per....but we've heard all this b 4 - at this point they ought to just borrow money and drill

    • meaning that it is being sold off in 13 separate pieces.
      line from last few paragraphs makes it sound as if it's being sold.... as if in the process or act of selling.... just wording i guess
      thanks for the post and yes anything positive on this board is very welcome

    • artist_formerly_known_as_pooch artist_formerly_known_as_pooch Apr 18, 2013 9:50 AM Flag

      you'll have to google the article for the rest of the article. I've tried a dozen times to post it and yahoo doesn't allow it

      • 1 Reply to artist_formerly_known_as_pooch
      • artist_formerly_known_as_pooch artist_formerly_known_as_pooch Apr 18, 2013 11:49 AM Flag

        ***rest of the article. embedded links seem to get rejected by yahoo so I had to textify if****

        "Some of the large folks that originally seemed more interested in a big position are now actually interested in county-type positions," said chief financial officer Michael Mercer. "They're looking to add on to positions they have already." Many companies have said that they are always on the lookout for bolt-on asset purchases that complement their existing positions in US onshore plays.

        Walker indicated that while EVEP wants to execute a deal, it is not under pressure to accept a sub-optimal offer. "When we are able to reach an acceptable agreement with a party or parties that appreciate a large, high-quality HBP [held-by production] position as much as we do, we will sell it," he said. "Until that time, we will remain patient, and are participating in wells to enhance our overall position."

        Chesapeake, in contrast, may not be in as strong a negotiating position. The company is also seeking to sell off some of its Utica assets as part of a broader divestment program intended to help it bridge the anticipated gap between cash flow and spending needs this year, and to pay down heavy debt levels.

        "Everybody's aware of Chesapeake's position," Walker said. "They might not be as concerned about terms."

    • Sorry but this is nothing but an attempt to spin the presentation as positive.. IMO, the presentation was exceptionally negative short term -- 3-9 months.

    • "Interest" is not (evidently) leading to "sales."

      EVEP is going to have to come down from that pie-in-the-sky $15K/acre fantasy.

 
EVEP
41.64+0.32(+0.77%)Aug 28 4:00 PMEDT

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