FINANACE_MONTHLY

FINANCE MONTHLY: Valuing Gas + Oil Assets

Whether in court or out of court, in most restructuring situations involving stakeholders with various claims to a Company’s assets, the valuation of these assets is a critical component. In restructurings involving oil and gas reserves, the valuation analyses are often more complex because of the technical data and skillset required to value these reserves.

Using their recent work on the Energy XXI case as a backdrop; LM+Co’s Managing Director, Aaron Kibbey and Associate, Brian Bostwick, along with HJ Gruy and Associates’ Robert Rasor, outline the complexities and key considerations when valuing gas and oil assets in the February 2017 issue of Finance Monthly.

DOWNLOAD PDF Finance Monthly valuing oil gas assets the complexities and key considerations

DEBTWIRE PODCAST: EPL Oil & Gas Noteholder Advisors Address Energy XXI Litigation Disputes

In the wake of Energy XXI’s December 30, 2016 plan effective date, WilmerHale bankruptcy and financial restructuring co-chair Phil Anker, Loughlin Management Partners managing directors Aaron Kibbey and John Sordillo, and H.J. Gruy and Associates executive vice president Robert Rasor joined Debtwire legal analyst Richard Goldman for an in-depth discussion on the litigation tactics these advisors employed to protect the interests of, and increase recoveries for, an ad hoc committee of EPL Oil & Gas noteholders. During their conversation, the expert panel addressed an inter-debtor cash collateral dispute that arose in the early days of the Chapter 11 case, the committee’s efforts to recharacterize, subordinate and disallow almost USD $1b in intercompany transfers, and proposed best practices when attempting to value oil and gas assets in support of plan confirmation.


LISTEN TO THE PODCASTKey Topic Time Stamps
06:26 Case background, capital structure and Chapter 11 descent discussion.
16:55 Cash collateral discussion.
29:15 Intercompany transfer discussion.
1:03:11 Asset valuation discussion.


 

Choosing the Best Road for a Successful Exit

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You’ve sourced a proprietary deal, invested millions in a company and dedicated countless man-hours throughout the past several years enhancing the business. Now it’s time to sell and realize the return on your investment. But today’s uncertain market is telling you otherwise. In a period defined by low earnings growth, financial sponsors are finding it difficult to exit their portfolio companies with strong returns on their investment. LM+Co’s Private Equity Value Creation team has developed and successfully implemented three roadmaps that ensure a smooth ride and provide financial sponsors with a market-ready plan that establishes the company’s value creation history and future growth potential.

LM+Co Capital’s Q3 2016 Newsletter

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LM+Co Capital is pleased to present our Q3 2016 middle market update, which highlights the key trends impacting US M+A and Capital Markets activity through the first half of 2016. Overall M+A and asset sales deal flow has slowed in this low-growth earnings environment and private equity firms have narrowed their focus to the purchasing of “quality” assets and improving the performance of existing assets. We expect a reversion to the mean in the remainder of 2016, after record levels of activity in 2014 and 2015 – leading to contracted leverage and valuation multiples across the middle-market. We see continued opportunities in the lower-middle-market as buyers look to “roll-up” smaller companies with continued support from the debt markets in the form of low rates and high levels of available levels of capital.

*LM+Co Capital is an independently operated affiliate of LM+Co. A licensed broker dealer, LM+Co Capital is registered with FINRA, SIPC.

LM+Co Capital’s Q1 2016 Newsletter

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LM+Co Capital is pleased to present our Q1 2016 middle-market update, which highlights the key trends impacting US M+A and Capital Markets activity at the end of 2015 and into 2016. Hampered by the significant fall in oil + gas prices, as well as significant global macro headwinds, deal flow in the US middle-market is slowing due in part to a contraction in credit markets. We see tremendous opportunity for strategic acquisitions in the energy sector and anticipate increased M+A activity and asset sales throughout 2016 for E+P and related service companies. The middle-market will remain in a state of flux in 2016, driven by a substantial over-hang of available capital to invest and a limited number of quality assets available for purchase.

*LM+Co Capital is an independently operated affiliate of LM+Co. A licensed broker dealer, LM+Co Capital is registered with FINRA, SIPC.

Middle-Market Oil Field Service Companies: Fighting Zombie Loans in the Oil Patch

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Plummeting energy prices have dramatically increased the number of failing middle-market Oil Field Services (OFS) companies. These zombies in the oil patch can’t stem the virus of negative cash flows despite cutting labor costs, operating expenses and capital budgets. They are still trying to operate but often not paying all their obligations to lenders, vendors, sub-contractors, employees and other creditors. Despite their struggle to survive, many face imminent collapse and liquidation after becoming increasingly over-levered and saddled with equipment they can’t sell.

Lenders are realizing that these zombies lurk in their portfolios, and are witnessing companies, in essence, liquidating to survive. In today’s market, recovery options for lenders are limited as over-supply has led to incredibly low realizable values on OFS equipment. Waiting and hoping for the business to return is no longer an option for lenders. Further delays will only result in the company’s continued deterioration and possible free fall into restructuring or liquidation. Lenders increasingly need to assess and deal with these zombies with the help of an outside professional that can provide their OFS companies with the expertise and guidance to address the immediate lack of liquidity and develop restructuring alternatives that maximizes recovery.

As energy price volatility continues in global markets, LM+Co provides a full range of advisory services to lenders and the OFS companies in their portfolio. Our Energy + Power team can help OFS companies adjust their strategies, restructure operations and develop an approach to confront turbulent market conditions.

Technology in Today’s Retail Environment: Obsolete Organizational Structures and Capability Management

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LM+Co, through its Performance Improvement and Value Creation practice, regularly advises retail businesses struggling with different aspects of four key problems prevalent in the industry today:

  1. Disruptive Models and the New Retail Experience
  2. Costly and Inefficient Information Technology
  3. Poor Customer Data and Business Intelligence Tools
  4. Obsolete Organizational Structures and Capability Misalignment

The common thread woven throughout these issues is the role of Information Technology. Companies that understand the significant impact of IT for their customers and business, and adapt to this new, high-tech landscape will emerge as category and sector leaders. Those who fail to realize how they can use IT to their competitive advantage, or do so too late, will often be left behind and soon made irrelevant by their savvier and more decisive peers.

Today’s article focuses on Obsolete Organizational Structures and Capability Misalignment. Rather than focusing on a traditional functional model, organizing highly capable and diverse individuals to work on the new challenges Retailers face produces high-achieving teams that deliver results. As a result, a successful retail organizational chart seldom resembles the very clean functional organizational chart of 20 years ago. More importantly, Retailers need to be conscious of their fast-evolving strategy and adjust their structure to align capabilities accordingly.

This is the fourth and final installment, all related to IT, addressing significant challenges to retailers. We’ve outlined, based on our experience, trends and changes we see, how the sector’s landscape is changing and what companies must do to effectively compete in this new market environment.

Technology in Today’s Retail Environment: Poor Customer Data and Business Intelligence Tools

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LM+Co, through its Performance Improvement and Value Creation practice, regularly advises retail businesses struggling with different aspects of four key problems prevalent in the industry today:

  1. Disruptive Models and the New Retail Experience
  2. Costly and Inefficient Information Technology
  3. Poor Customer Data and Business Intelligence Tools
  4. Obsolete Organizational Structures and Capability Misalignment

The common thread woven throughout these issues is the role of Information Technology. Companies that understand the significant impact of IT for their customers and business, and adapt to this new, high-tech landscape will emerge as category and sector leaders. Those who fail to realize how they can use IT to their competitive advantage, or do so too late, will often be left behind and soon made irrelevant by their savvier and more decisive peers.

Today’s article focuses on Poor Customer Data and Business Intelligence Tools, a problem that is more common than many retail executives realize. The primary difference between a successful retailer and one that struggles often lies in how they navigate customer data to achieve insights that drive value. Retailers need to develop “One View of the Customer” and create an omnichannel shopping experience by updating outdated IT systems that house customer data in a number of different silos.

This is the third in a series of four articles that explores each of these recurring Retail and IT themes, painting a picture of how the retail experience and landscape is changing and what companies must do to not only survive but become formidable competitors in this new and ruthless retail environment.

Technology in Today’s Retail Environment: The Perils of Costly and Inefficient Information Technology

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LM+Co, through its Performance Improvement and Value Creation practice, regularly advises retail businesses struggling with different aspects of four key problems prevalent in the industry today:

  1. Disruptive Models and the New Retail Experience
  2. Costly and Inefficient Information Technology
  3. Poor Customer Data and Business Intelligence Tools
  4. Obsolete Organizational Structures and Capability Misalignment

The common thread woven throughout these issues is the role of Information Technology. Companies that understand the significant impact of IT for their customers and business, and adapt to this new, high-tech landscape will emerge as category and sector leaders. Those who fail to realize how they can use IT to their competitive advantage, or do so too late, will often be left behind and soon made irrelevant by their savvier and more decisive peers.

Today’s report focuses on Costly and Inefficient Information Technology. For today’s retailers, staying current with Information Technology Systems can be costly and disruptive, but sticking to the fundamentals will keep you afloat. Today’s IT paradigm is to run smarter, faster and cheaper. In order to achieve this, management must stay abreast of the ever-evolving technologies and, more importantly, understand when to upgrade with subtle accelerators in an IT platform and when significant investments are required.

This is the second in a series of four articles that explores each of these recurring Retail and IT themes, painting a picture of how the retail experience and landscape is changing and what companies must do to not only survive but become formidable competitors in this new and ruthless retail environment.

Technology in Today’s Retail Environment: The New Retail Experience

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LM+Co, through its Performance Improvement and Value Creation practice, regularly advises retail businesses struggling with different aspects of four key problems prevalent in the industry today:

  1. Disruptive Models and the New Retail Experience
  2. Costly and Inefficient Information Technology
  3. Poor Customer Data and Business Intelligence Tools
  4. Obsolete Organizational Structures and Capability Misalignment

The common thread woven throughout these issues is the role of Information Technology. Companies that understand the significant impact of IT for their customers and business, and adapt to this new, high-tech landscape will emerge as category and sector leaders. Those who fail to realize how they can use IT to their competitive advantage, or do so too late, will often be left behind and soon made irrelevant by their savvier and more decisive peers.

Today’s report focuses on Disruptive Models and the New Retail Experience. Customers are rapidly moving to online shopping through mobile, social and cloud platforms. As one baby boomer CEO put it, “when I am buying all kinds of things including pizza on my phone, I only wonder what the Millennials are doing?” Millennials are looking for connected experiences such as single-click Pinterest, Facebook and Twitter buying, all on their mobile devices. You don’t have to be a chic and upscale business targeting a young demographic to post impressive mobile and online sales numbers. Retail giant Macy’s sells more than 20% of its merchandise through the web while Williams Sonoma recently reported that more than 50% of its sales were generated through their online channel.

This is the first in a series of four articles that explores each of these recurring Retail and IT themes, painting a picture of how the retail experience and landscape is changing and what companies must do to not only survive but become formidable competitors in this new and ruthless retail environment.