| Today’s Upstream Updates

• What a week of deal-making! And, right when it seemed there was a lull in the market we got three notable deals announced

• Be sure to check-in on the newsletter as we are hearing rumors of several pending news-worthy deals coming over the next few weeks

• We’ll continue with our deal write-ups to provide insights and metrics to help keep you in-the-know!

| Markets - Energy Prices

Note: pricing is as of time of publishing.

| Morning News - Energy 

• Oil up ahead of US inflation data, set for third weekly gain (Reuters)

• Banker-lawyer duo make billions from LNG bet (Yahoo)

• Senate probes operators on price collusion with OPEC (Reuters)

• Tamboran Resources priced its IPO at $24/share (Release)

• Hilcorp buys Alaskan assets from Italian oil major Eni (OilPrice)

• Panama Canal traffic to increase as drought eases (EIA)

• US regulators approve LA LNG plant over climate objections (Reuters)

• China hoarding coal ahead of summer peak heat (OilPrice)

• BP stops hiring, slows renewable roll-out to win investors (Reuters)

• SM Energy stock dives 10% as investors weigh XCL deal (Hart Energy)

• EIA Gas Weekly Update - shows built in storage (EIA)

| Deal Write-up - SM Energy Buys XCL Resources

• NOTE - this was in yesterday’s newsletter and we’ve added a few more deal metrics below to estimate upside value allocation

• SM Energy and Northern Oil & Gas announced they are acquiring the Uinta Basin assets of XCL Resources for $2.55 billion

• SM Energy will own 80% (~$2 billion) and NOG will own 20% (~$510 million)

• XCL Resources is backed by EnCap Investments and Rice Investment Group

• SM Energy will be the operator

• SM announced it will increase its fixed dividend by 11%

• SM will finance the acquisition through a combination of debt and cash on hand

• Asset Details to SM Energy:

  • 37,200 net acres

  • 43 Mboe/d (88% oil)

  • 390 net locations

  • 107 MMboe proved reserves

  • 2.9x NTM adjusted EBITDA multiple

  • $59 Mboe/d production multiple

• Upside Value Allocation (net to SM Energy)

  • Using $35/Mboe/d implies a PDP value of $1.5 billion

  • $2.0 billion - $1.5 billion = $495 million for upside

  • $/net location = $1.3 million (note - Matador reported paying $1.7 million/location on their Ameredev deal)

  • $/acre (excluding PDP) = $13k

| Noteworthy from Energy X (Twitter)

• Now cheaper to buy a new home than an existing (Link)

• Significant decline in new copper discoveries (Link)

• Over 70% of newly drilled wells are “child” wells (Link)

| Monthly Upstream Deals

| Monthly Capital Markets

• Secondary Equity Offering 6/26/24 - TXO Partners (TXO) announced it has priced and upsized its common units offering. TXO offered 6,500,000 units, upsized from 5,000,000, at a price of $20/unit to the market. This represents a slight discount to the at the market price of around ~$20.50/unit. Underwriters have the option to purchase an additional 975,000 units. Total net proceeds expected to be $122.5 MM and will be used to help fund the cash portion of its recently announced acquisition of Williston Basin assets.

• IPO Equity 6/27/24 - Tamboran Resources (TBN) priced its initial public offering of 3,125,000 shares of common stock at the low end of its range at $24/share. Gross proceeds raised of $75 million. Underwriters will have a 30-day option to purchase 468,750 shares at the IPO price, less the underwriting discount. TBN shares are listed on the NYSE.

• Debt 6/13/2024 - Crescent Energy (CRGY) announced the pricing of $750 million senior notes due 2033. Notes will pay an interest rate of 7.375% per year and were priced at par. Proceeds will be used to fund the cash portion of the consideration of the previously announced merger with SilverBow Resources. Should the merger not happen, CRGY will redeem the notes for their full value and unpaid accrued interest (Link).

• Debt 6/03/2024 - Diversified Energy (DEC) announced it has closed on an ABS refinancing. The $610 million principal notes with net proceeds of $592 million (net of fees, expenses and interest reserve) carry a blended fixed coupon of 7.28%. Proceeds to refinance existing ABS and reduce borrowings on Company RBL. Financing is also part of the Oaktree WI purchase. DEC noted the offering was oversubscribed with over $1.7 billion in orders from 18 investors (Link).

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Disclaimer - The information provided in this newsletter is for informational purposes only and should not be construed as investment advice. The contents and references herein do not constitute a recommendation to buy, sell, or hold any securities. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions based on the information provided herein. The authors and publisher of this newsletter are not liable for any actions taken by readers based on the information contained herei