Upstream Updates - Tuesday, July 9, 2024

| Today’s Upstream Updates

• Oil prices trading off today as demand outlook is clouded post-Beryl

• Natural Gas prices hold steady with warm weather forecast providing downside support

• Devon announced it was acquiring Grayson Mill Energy (write up below)

| Markets - Energy Prices

Note: pricing is as of time of publishing.

| Morning News - Energy 

• Oil prices fall for the third straight day post-Beryl (CNBC)

• China’s demand sputters give oil markets a chill (Energy Intelligence)

• BP drops after warning of write downs, lower refining margins (Yahoo)

• Next big power play on Wall Street (WSJ )

• Nearly 2 MM people in Houston still without power (ABC13)

• Wells Fargo - AI power demand benefiting Nat Gas (Seeking Alpha)

• Dominion Energy to acquire offshore wind lease (Release)

• Aramco looks to raise $3 BN in new bond offering (OilPrice)

| X (Twitter) Energy - Insightful Posts 

• Interest payments absorb 57% of some government revenues (Link)

• US LNG supply and exports chart (Link)

• Apache investors secure initial approval for $65 MM deal (Link)

| Devon Agrees To Buy Grayson Mill Energy

• Another exit for EnCap Investments

• Devon Energy has agreed to acquire the Williston Basin assets of Grayson Mill Energy for $5 billion

• Consideration is $3.25 billion cash plus $1.75 billion in DVN shares

• Transaction details not as robust as other recent deals, however, we take a shot at a few estimates

• Deal Overview

  • Price - $5 billion

  • Net production - 100,000 boe/d

  • Net acres - 307,000

  • Gross locations - 500

  • Gross refrac candidates - 300

  • Est. EBITDAX - $1.3 billion

• Deal Metrics

  • $/net production - $50,000

  • PDP Value (@$35k/boe/d) - $3.5 billion

  • Upside Value - $1.5 billion

  • $/net location - $2.7 million (includes refracs, applies 70% WI)

  • $/net acre - ~$4,900 (excludes PDP value)

Transaction Map

| July Capital Markets Activity

• Pending 

| Partnerships

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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