U.S. Upstream M&A Update From Enverus – The ENB Podcast with Andrew Dittmar

Andrew Dittmar - Enverus - M&A activity in the energy market

This was a fun M&A update with Andrew Dittmar, Director, Enverus. You have heard the old phrase: “Friends don let friends make decisions without data”. I have added on the phrase “If you need data in the energy market talk to Enverus.” Last year there was 66 billion in M&A activity, with 9 billion of that in Q4. Andrew has a real grip on the market and is a true resource for Enverus.

It will be fun to have Andrew back next quarter, and even see if my prediction of $120 oil has come to pass by then. In the meantime enjoy listening to an expert. (him not me).

 

Andrew Dittmar

Please connect with Andrew on his LinkedIn Here

The following is an automatic transcription, and we disavow any errors unless they make us seem funnier or smarter.

Stu Turley, CEO, Sandstone Group [00:00:04] Hello, everybody, today, welcome to the Energy News podcast, and we got a fun schedule today. Today is Andrew Dettmer and I’ll tell you, Andrew, this is about our fourth I think podcast together, and I just am so appreciative of everything that you do over it and various, and thank you for stopping by today.

Andrew Dittmar, Director, Enverus [00:00:26] Yeah, no, absolutely that we’ve been able to keep this going for as long as we have and always look forward to this. One of my favorite talks we do after this report goes out.

 

Stu Turley, CEO, Sandstone Group [00:00:35] Oh, I’ll tell you, you know, it’s kind of fun is it looks like you just got up there promoted to director. So, congratulations. I think that’s very good. It means that somebody is paying attention to your good work. So, you know, I

 

Andrew Dittmar, Director, Enverus [00:00:51] always wonder as an analyst, you know, you send out your notes in that and you hope somebody is looking.

 

Stu Turley, CEO, Sandstone Group [00:00:55] Oh, absolutely. And for those that don’t understand and various in various means data, you just want to give us a real brief idea of what in is.

 

Andrew Dittmar, Director, Enverus [00:01:06] Sure. So, yeah, we’re a data-focused oil and gas, I guess, technology company and provide a really broad range of tech-driven solutions to various issues in the oil and gas, anything from accounts and payroll management to what I do, which is more analysis of the business side, focus on geology while results, stock performance and then my particular area of expertise. Mergers and acquisitions we put out reports to go to clients, as well as provide databases that people can use to access their information.

 

Stu Turley, CEO, Sandstone Group [00:01:40] And so one of the things that we’re talking about today is you guys put out a really cool quarterly report. And I mean, there is speaking of data. Holy smokes. I was going through it and it’s like lots of data in here. And when you take a look, it looks like you guys came up within Q4. We had $9 billion in M&A. And for the year was $6 billion. Can you talk a little bit about where those numbers come from?

 

Andrew Dittmar, Director, Enverus [00:02:13] Sure. So, yeah, transacted about nine billion in Q4, which brought our total to, I think, about 66 billion for the year. Right, about twenty-five percent year over year versus what we did in 2020, which was the first year of our COVID influence market. But we’re still off the average that we have from 2015 to 2019, which is running about 72 billion. And we’ve had a lot of big deals. So, it feels like an extremely busy M&A market, but activity is variable. You know, just within 2021, we went, I think, from a high of thirty-four billion in Q2, down to about 18 billion in Q3 and then nine billion in Q4. So that has activity each quarter. Yeah, yeah. I’m sure we’ll get into this more in the talk. But based on what we’ve seen is a selection of large, multibillion-dollar deals. And I think the number of billion-plus dollar deals transacted is pretty much back to its pre-COVID average. I haven’t seen the sort of bread and butter, say, 100 to 500 million and type market that we had before David. So that’s maybe adding a little bit of variability to the M&A market and keeping the number of total deals transacted with total value down a bit. Even though when you read the headlines and you see the amount of oil and gas is brought up in sort of the broader media, it feels like we’re in this exceedingly busy, busy environment.

 

Stu Turley, CEO, Sandstone Group [00:03:30] When we talk about the five biggest deals you get at night and outlined on Nice, you got Continental, Southwestern Energy, Earth, St. Paul Home, and Diversified and tap St. Goodrich, Goodrich good people over there. So you want to go through just some of the bigger deals, and it looks like the Haynesville Delaware, and those were the really big ones in there, you know? So tell us a little bit about the big boys in all of these and also the plays because, you know, the Haynesville is big natural gas. So we got about 19 questions for you in here. Dirk.

 

Andrew Dittmar, Director, Enverus [00:04:10] Yeah, Delaware, and Haynesville is definitely where the activity was both in Q4 and really throughout 2021. And so you can see those plays, each representing one commodity. I think Delaware has been your go-to spot oil deals and Haynesville, obviously, like you said, the gas place, what’s been your go-to spot for gas deals? And I think that speaks to public companies really wanting to go out and add some inventory. Know they’re generating great cash flow right now, and that’s being reflected in their stock prices. Yeah, it’s strange on a day like today for an energy analyst that was for a few years to see energy in the green and the rest of the market rent. And I felt like my entire career watching that in the other direction. But so they’re doing great. I mean, generating cash flow. You’re still somewhat in agreement.

 

Stu Turley, CEO, Sandstone Group [00:04:51] And I’m sorry, I’m not ignoring you. I’m just looking. Oil’s at eighty-four, seventy-eight and that gas is at 430 and Brant looks like it’s at eighty-four, twenty-five. Wow. Is WTI over Brant? I haven’t looked today. Oh yeah, that’s weird. Anyway, I’m probably cross-eyed and looking at it wrong, but

 

Andrew Dittmar, Director, Enverus [00:05:21] I do the same thing. I the charts obligated to get my eyes checked and

 

Stu Turley, CEO, Sandstone Group [00:05:26] have the numbers that

 

Andrew Dittmar, Director, Enverus [00:05:28] it felt like we weren’t ever going to see again. You know, we all remember the selloff in 2014, hitting them on the way down, and oh, no big deal will be back here someday and then years like, Oh, we’re never going to get back there. So it’s been a good time to be an energy company doing well, and they want to keep the good times rolling. And that’s going to require having plenty of high-quality inventory, right where the question marks for the industry in shale is OK, we’re doing great, ideally our best locations. How many of these locations do we have, and can we sustain this for the next five to 10 years? Right? The companies, that’s no problem. If you’re a pioneer Diamondback, one of the guys that’s big in the Permian, you have lots of tier-one stuff. You’ve got 20 years of inventory or more. Unfortunately, some companies and other players don’t have that luxury. And so continental would be one example of that. The big Bakken, which is great, played fantastic rock, right, doesn’t have this. The inventory stacked at the Permian say, would, and it’s been drilled heavily for the last 10 years. You know, these core locations were how companies write those lean years that we had in 2015, 2016, 2017, you are out the new high core and drill your best locations. Right? That’s a finite resource. And as you walked through that, you need to go out and look at, OK, what are some other areas we can add? Barton Eagle Ford doesn’t have the resource to act a little more mature, drilled that Midland is a great rock, but people don’t want to part with it right now that by a few big public and private companies and say, Well, hey, we’re in high-quality locations available on the oil side of Delaware is a big answer to that. Yep, that’s where you see companies like Continental that wasn’t previously in the basin want to go out and find a position, find a position to scale. And that’s what they were able to do with the pioneer deal pioneers one of those companies and the other candidate’s inventory rich. So they acquired these Delaware assets in their purchase partially back in late 2020. Good assets stack up great in the overall North American resource stack, but maybe not competitive with the best of the best the pioneer is sitting on in the Midland. Right? They were interested in monetizing the look really good. If you’re a continental and looking to go out and build that inventory runway. So that was our headliner from Q4 and a pretty natural follow-on. And you ever see a big wave of corporate consolidation like we had expected there’s going to be some follow-on non-core assets sales as companies sort of dig through these portfolios and figure out what they don’t need anymore or what they’ve newly acquired that they don’t particularly want. So Continental obviously took advantage of that to move in. And, you know, southern Delaware maybe is a little more challenging in the northern part of the basin. But again, still Great Rock Continental is a great operator, generally good things, good engineering team. And so it’ll be exciting to see what they can do with this asset.

 

Stu Turley, CEO, Sandstone Group [00:08:08] Boom. And so when you talk about free cash flow and you talk about it, so it’s easier for the oil companies to come in and say, we’re going to buy these assets because they’re either already producing. And it’s not going to just be coming in and they can then drill the offset wells and all of those kinds of things. So it makes it easier for the investors to say, yeah, go ahead and you know, they’re not going to get penalized anymore as they did before right here.

 

Andrew Dittmar, Director, Enverus [00:08:37] Yeah, no. We’ve got a lot of questions floating around that or many of them. But to tackle what you’re talking about, they’re one of the things that makes buying attractive is the prices are still pretty reasonable. And I think that’s being driven by exactly what you said. These deals need to be accretive on free cash flow. They need to be producing and the old days of going out and buying three wells and a big chunk of land with great plans for the future and paying cash. What are the numbers? You saw 20, 30, 40 thousand an acre in the Permian a few years back, or pretty much so on deals like the continental pioneer. You know, I think after running our numbers and doing the math, we saw that somewhere around 10000 an acre, maybe 800000 per location. So it’s still pretty modest pricing relative to what you saw a few years back and a big PDP component on that. And so when you look at what these are trading at on a cash flow multiple, they’re mostly trading around, you know, say, three-point five times cash flow under four, even for assets that have quite a bit of inventory. So when that’s necessary, I think to get that investor support is that you need to show that, hey, these are going to be created out of the gate, you’re going to build our their cash flow base. And at the same time, that’s an inventory that’s going to be helpful down the road.

 

Stu Turley, CEO, Sandstone Group [00:09:52] Also, you know, know we always talk about how good the Marcellus is up there, and it didn’t seem like there was a lot of activity in the Marcellus this time. Can you tell us a little bit of what’s going on up over there or why it wasn’t any hit on what you think?

 

Andrew Dittmar, Director, Enverus [00:10:09] Sure. So a couple of different issues going on in the Marcellus. One that affects the M&A market but isn’t primarily an immediate issue is the takeaway capacity in the play. That’s been a big issue in the industry that as you look to grow volumes, the pipe isn’t really there to get it to market and you’re dealing with pretty unfriendly, I guess might be too strong of a word political regimes in the states that you need across the building anywhere. It’s particularly difficult if you’re looking at building in New York versus Texas or Louisiana, Oklahoma or not. That was the only state with the anti-pipeline in the small town that tried taking advantage of the remote work situation to be in there in a pipeline not too far away from town. And there was a bunch of stuff the pipeline signs around Keystone Pipeline is in the ground. Some of the stuff the pipeline signs are still up, but so not unique to the Marcellus, but definitely more difficult to get the infrastructure in the Northeast versus some of the other plays.

 

Stu Turley, CEO, Sandstone Group [00:11:11] I got tickled when I saw a Bloomberg article the other day, and they said that they are importing LNG from the Arctic, from Russia instead of just going from a day, you know, from the Marcellus and putting a pipeline in, it’d be a cheaper. And why are we giving Putin any money? I don’t know. And I don’t know. I just think I got kind of tickled at that one. So when you take a look at this on your team and you. I’m sorry, I just you have so much in here. One of the charts that I found that were very interesting on this was the production versus acreage and value allocations. So if you I mean, so we’re going to take a look at this chart, as we put it into the area. What does that mean? I mean, as you sit there and say production versus acreage versus allocations, does it make sense?

 

Andrew Dittmar, Director, Enverus [00:12:13] Yeah, sure. So it’s in Italian versus has a deal come up? The primary responsibility for myself and my team is to figure out, OK, what’s the split in value in these assets? What are they paying for the existing wells of production? And where are they paying for the upside if it’s there, either expressed in terms of dollars per acre or what we like to run now is actually dollar per allocation, quite a bit a little bit clearer picture of what they’re actually acquiring? And so that chart is just taking all these individual deals that we’ve analyzed over the course of the quarter or the year and then summing up, OK, here’s how much cumulatively buyers spend on existing wells or production PDP value versus what they paid for upside. And so that gets back, I think, to what we were just talking about a couple of minutes ago, where we still see most of the value flowing into the production or PDP side of these assets because investors want this to be accretive out of the gate because they’re keeping a lid on acreage. Prices and you still see that being the largest component of value and I believe is about 70 percent the value the PDP for this quarter. And you’ll see pretty, pretty broad jumps from quarter to quarter. You know, in Q2, I think we saw a little bit more to acreage, which is just the nature of the deals. There were lots of private equity exits in there and they were getting paid a little bit more upside. But overall, definitely have not reverted to say maybe a 50-50 type split that we would have seen back in the pre-COVID sort of go-man buying years 2016, 2017, 2018. Right?

 

Stu Turley, CEO, Sandstone Group [00:13:43] But also when we sit back and think the number of pads, you know, proven but undeveloped, those have really gone down as everybody’s been kind of taking those out. So in drilling, going to go up in pricings as we get rid of those silly, you know, the ones that were just kind of sitting there. So our drilling is going to go up. But with this on the PDP, it’s actually very well-proven turf. You know, when you’re sitting there drilling a PDP, it’s really I mean, they’ve already got other ones working there, right? So I mean, it’s the investors are not it’s not wildcat getting.

 

Andrew Dittmar, Director, Enverus [00:14:27] Know, yeah, these are fairly well-established fields. Which is why, you know, people like Mike Shale so much and sometimes. We got frustrated by Shell’s inability to generate free cash flow, and you need to look back at conventional the Gulf of Mexico and then you go out and you drill at three, 30, $30 million dries. All the shale fields are actually pretty nice. You’re pretty consistent on what you’re going to get. So yeah, I mean, the big questions now are more around spacing, completion, design. You know, the wells are going to be productive. It’s just a matter of how do you maximize the economics, right? Relative to the cost of the well and the exploratory phase and shale, as you said, is really done? I mean, I don’t think there are any big, undiscovered shale fields out there. You know, you revisit some of the other intervals and some of the existing fields, sometimes successfully, sometimes not. You know, the Austin chalk in the Eagle, Ford has been one of the more successful redevelopments or returns here lately. You’ve seen some stronger results sort of up and down the trend. And obviously, in the Permian, there’s this great resource stack there. And to see people thinking doing well in the Wolfcamp beach and we go drill the Wolfcamp A B, you’re out there. There are some big mountains track that. But yeah, there’s not really much in the way of well, and we’re not going to go out and find a new shale field. We’re really not even going to expand the productive margins of the existing shale fields too much. I don’t think that was a big thing. Again, a few years ago and private equity sort of led the charge on, OK, the well, results are good on this pastor. Can we move when ranch over at least some acreage and drill a well, we’ll see how it goes? I think we’ve pretty much figured out where it dies off, at least at the prices that we’re likely to see right now.

 

Stu Turley, CEO, Sandstone Group [00:16:08] Do you see the PE firms getting more involved or do you see him going more public? I mean, because you do have some good information in here and then even the IPO later on. So where do you see this is going to get bigger? Is Publix doing more? I mean, you’re on a tough one at you here because the crystal, you know, the Andrew Crystal Ball is going to be a little tough year for you on that one.

 

Andrew Dittmar, Director, Enverus [00:16:34] Yeah. Yeah, it’s always fun to try to read the tea leaves on this and figure out what’s going to happen. Private equity, you know, there’s they’re so great about disclosures, just really a clear industry that we have all the information we could possibly want to own. And it’s really hard to know what those guys are up to. I think one of the key parts of their business is being secretive and sometimes it appears, they don’t want to let their competitors know what they’re up to. So we generally know when they sell because it goes to the public company and obviously the public company, you get great disclosures. And so sales are relatively easy to track and we’ve seen a lot of those this year that’s been a primary driver of activity, right? A lot of investments have been outstanding for, say, three to five years, which is sort of the timeframe these firms generally commit to on capital deployment. Right. I think some of them we’re getting slightly concerned about how easy it was going to be to unwind some of these investments and then sort of public via step back in an active market and they were able to able to monetize some of those. I think the willingness of firms themselves to take equity, also facilitating that deal market quite a bit higher because we’d seen mostly cash paid to sellers that this year, we saw a pretty high willingness on these bigger deals, especially early in the year to take equity, which ended up being a great decision for them. Some of them were able to sell their assets at a pretty nice headline price. And then you look at how the stock of the buyer performed in the next six months. They added another 30 40, 50 percent to the deal value because the equity they took went up in value. So that worked out well. Net seller But that doesn’t mean that they’re leaving the industry, you know, they’re coming back in as well. We’ve seen some of the deals you pulled out near the start and Paloma picking up Goodrich was one of the bigger entries we saw, which is really interesting because the Haynesville otherwise has been pretty well dominated by this private to public shift. We saw Indigo Exit GEP Haynesville Buy and Sell, which sold as a public company, but it’s only been public for about six weeks, and Blackstone still owns most of the stocks we’ll call that acquisitive exit. But Palomo in cap back company with the other direction and bought in took out Goodrich, which didn’t really have the scale to be competitive with sort of treading water in the public markets. So right. And then interestingly, the team that bought them from in-cabin is a pretty traditional, I guess, p style team. Or they tend to buy an asset, enhance it, improve it and then look to sell it down the road. So we’ve seen some pretty firms recently shift more towards this distribution model versus the sale model, where we’re not going to rely on a liquidation event to get money back to our sponsors. We’re going to go out and buy a PDP heavy cash-flowing asset. We’re not as concerned about the sales, how much revenue we can generate, and then we’re going to get that back to our LPs in the form of distributions. But this Haynesville investment looks a little bit more old school in terms of going out and buying an asset and emerging will look to flip that back into the public markets at some point in the next five, five years or so. If they are definitely still active in the space race plays that aren’t as attractive to public companies like. Back in the Eagle Ford legacy areas, you know, I think where they’re going to be shopping, they’re always looking for value in the market and where there may be a little mismatch in pricing, right? I think the challenge for private equity firms at this point is not to steer the conversation too far out of the core, but it’s probably more around fundraising. If you’ve got a lot of dry powder already sitting there in there with the firms, I think it has quite a bit. You’re in good shape and there are some opportunities to deploy that if you’re not looking to raise new funds. It’s not impossible, but it’s more challenging than it has been in prior years, both because of a combination of oil and gas sort of getting a bit of a stigma around the returns it was able to generate in prior years, which we’ve been able to fix and sort of, I guess, social distaste in oil and gas investments, which we’re working on fixing by being more responsible in addressing these issues and showing how energy can be a be a key and is a key part of our energy. Gas is a key part of the energy stack going forward.

 

Stu Turley, CEO, Sandstone Group [00:20:42] It’s kind of you’ve kind of entered into my next questions here and I’m the thing I got really tickled with is the cop 26. They actually announced, you know, the thing in Europe. And they said, Oh, by the way, natural gas is now renewable. You know, they’re kind of doing the old switcheroo here. And then with the Biden administration, with the infrastructure bill, they’ve now said natural gas is renewable because they can’t get to renewable, you know, carbon net-zero without natural gas. So ESG, you know, how cool is that that natural gas is now considered, you know, renewable in an ESG? Don’t figure this out, right? And your deal by commodity in this chart is here. This report is fabulous. Everybody needs to go to the inverse site, register, and get the report. Not that, you know, I’m not going to give investors another plot, but holy smokes are great, great data and everything else. You’re seeing gas versus oil and gas. Which kind are you seeing the deal value buying commodity? Even though you may get a lot of gas, you know, oil with a higher price seems to be getting a better price on that. But natural gas is now greener, you know, so go right? Yeah, go figure that one out. Which one do you think is coming around the corner? For more what’s available? Do you think that the market is going to bear oil or gas on the M&A-type stuff?

 

Andrew Dittmar, Director, Enverus [00:22:20] Or, you know, we see both, obviously traditionally the U.S., the markets are going to have a higher deal value percentage in oil. Read more Oil plays a bigger for the U.S. independents, which are the ones that do most of the wheeling and dealing here. Oil is still a primary focus. There are obviously gas companies out there. And if you like to tear up, which is the combination of Cimarex and Cabot, which actually like what they did that they hated, sometimes one commodity is going to outperform the other. We don’t think it makes sense to be purely gas or purely oil and say the great gas company and great oil company marry them together and we can allocate capital wherever it makes the most sense. Mercury is a little bit cooler. That one, when it first got announced that they were able to close it. And I think it makes reasonable sense from a business perspective. You know, just the focus of U.S. independence. The level of oil plays in scale that is out there relative to gas oil generally predominates on the commodity mix. I was actually a little bit surprised we didn’t see more gas deals in 2021, just given how strong prices were the tailwind from what you said, that it’s sort of working its way into these ESG goals. There, there are so many long-term secular bull indicators for U.S. gas. I mean, you have a real domestic consumption that the administration seems to be supportive of gas, the key feedstock in Peckham. And we’ve all seen the inflation numbers and how high raw material prices are and prices are high, too. So big pet Kim development and I gosh, it seems like every few months I see another big, big development or out somewhere between Louisiana and Corpus Christi here in Texas. And then also LNG exports. And you look at U.S. gas prices, they seem high, and you see what’s going on in Europe and oh my gosh, our gas is practically free. So, yes, big global. So but the only area we really saw much demand for gas assets was in Haynesville. Talk to our key players, Marcellus, you can see, you know, maybe where people are a little bit less inclined to do deals there and just to revisit that, you know, besides the pipelines and some of the issues, or maybe that the market was just not that many ready sellers in the Marcellus. Most of it’s owned by public companies. I think consolidation when those public companies make some sense, but public corporate deals are always that easy to put together. You have to have

 

Stu Turley, CEO, Sandstone Group [00:24:42] in the Marcellus, they’re probably yeah, they’re probably waiting for pipelines, you know, they don’t want to sell till they get it right. I mean, a smart alec. But in Haynesville, they’ve got the great takeaway push. They’ve got a great takeaway for Cheniere or any of those others. Schneider’s stock price just had a good all-time high because what you just mentioned, all the exports going to Europe was it a couple of weeks ago they just had 20 tankers of LNG go and they got shuttled over to Europe. They need some LNG. Don’t think

 

Andrew Dittmar, Director, Enverus [00:25:18] you’re backing Putin and then

 

Stu Turley, CEO, Sandstone Group [00:25:22] I’d rather him buy from us. You know, when you sit back and you take a look at strip pricing and your deals and everything else, you know, it’s like sixty-five dollars. What? I’m not sure what the number is right now, but when folks are doing their financial analysis on strip rate, is that what you use when you’re taking a look at your forward modeling and those things tell us a little bit about how you do your modeling?

 

Andrew Dittmar, Director, Enverus [00:25:49] Yeah. So the pricing is, I think the industry standard 9X strip and I think in our own analysis, we tend to use the strip for twenty-four months and then flat whatever we think a good future price is going to be, and we tend to be pretty conservative on that. As our most analysts think right now we’re using like flat-six and three after two years, you know, a buyer of us is going to stress test assets. And so they’re going to say, OK, it makes sense. It’s strip pricing, but a strip goes to x y z. Is it still going to make financial decisions that sense for us? So there’s doesn’t aren’t the numbers that are published, but from an internal perspective, that’s key as the stress testing. And okay, what’s the minimum price where you see this work? And I think the oil and gas industry overall has become extremely cautious because of the bad years that we had. And so you don’t see companies buying assets that have to have current strip even to where they’re going to work if prices go down quite a bit. Right. We want them to break even. Actually, it’s interesting. We ran an analysis on what break-even prices companies are willing to pay for upside out. So this is the price you need to break even on your inventory. And what we found is that pretty consistently in oil plays, future drilling locations need to break even at forty-five dollars to get allocated value in M&A deal

 

Stu Turley, CEO, Sandstone Group [00:27:07] in U.S. shale and U.S. shale, right? Cool.

 

Andrew Dittmar, Director, Enverus [00:27:12] if your inventory is ever that it, generally you’re just buying the assets for PDP and allocating zero value there. And the pivot point gas seems to be about 225 and MCF. So the price is pretty far beneath where the current strip is. They’re taking a good bit of wiggle room to the downside into these deals for themselves.

 

Stu Turley, CEO, Sandstone Group [00:27:31] That’s an interesting number when you say just as a ballpark. Forty-five dollars. And when you consider Saudi Arabia, it’s what, 50 cents, you know? I’m kidding. I mean, whatever the number is there, you know, in order for them, it just kind of falls out of the ground. Kind of like, what was it? Jed Clampett when he shot the shot. Never mind the Beverly Hillbillies that you probably don’t even remember what it was.

 

Andrew Dittmar, Director, Enverus [00:27:54] My parents loved their old television show, which is

 

Stu Turley, CEO, Sandstone Group [00:27:58] when a shot of the ground and come from the ground, a bubbling crude that just tells you how old I am. In fact, most people call me Jethro because I’m that stupid. But what do you see coming around for Q2? Do you see the M&A stuff picking up? What do you kind of guess on the horizon here?

 

Andrew Dittmar, Director, Enverus [00:28:20] Sure. So, you know, future’s always easy to read somewhere that be a hundred percent here, as always. And if I had to guess, I think that we’re going to get back to is hopefully more of a normal pre-COVID type M&A market. I mentioned at the beginning that what we really missed are these sort of bread and butter one hundred to 500 million dollar asset deals that companies did all the time back before 2020 as they adjusted their portfolios with strong commodity prices. Plus all of these big corporate deals, we’ve seen that drive noncore divestments. I think there should be a good backlog of these assets to be put on the market, but I think there’s going to be a willing buyer pool both on the public and private side to scoop some of them up. And so I think and hope we see more regular deal flow this year to smooth out that boom or bust type cycle that we’ve had the last two years where it’s big deals or nothing. On the other hand, we may get slightly less of these big, multibillion-dollar corporate tie-ups or exits. And that’s mostly just a function that we’ve had so many of them the last two years that companies that were really anxious to transact either as a seller or buyer who for the most part, found a deal at this point. And so the potential pool of deal partners out there has shrunk. And along with that, these mid-cap publics were really under quite a bit of investor pressure. They’re having a hard time with some commodity prices, better cash flow generation share prices are up. They’re feeling a lot better about their future. So there’s probably a little bit less of an impetus to sell there than what we had, maybe in 2020. So from that group perspective, it makes sense to have further consolidation in the shale patch. There are quite a few redundant companies. You know, you could run down a list and where are these both independent publics they should merge and that would really cut the cost structure. But I don’t know that they’re going to be in a hurry to do that. We’ll probably get a few. But timing and pace on public company big time in the news. Always notoriously difficult to call.

 

Stu Turley, CEO, Sandstone Group [00:30:11] I’ll tell you. You know, it’s kind of exciting time, like you say, to be in energy. And one thing I’ve really enjoyed about all of our podcasts that you and I have been on together is your love of your job. Andrew is really kind of fun when you work for a great company, like in various and then you really like your job. I just like to commend you for such a great report, you and your team putting this all together. And I’m looking forward to seeing your report next and next quarter because there’s a ton of stuff going on over there. And congratulations on being a director over there now.

 

Andrew Dittmar, Director, Enverus [00:30:50] Well, thank you. Yeah, I love it. As you said, it’s a really exciting time to be energy. There’s always something new and it makes it tough to call the future because the future is constantly changing. But that’s what makes our job so exciting and keeps us employed. People always know information on new trends.

 

Stu Turley, CEO, Sandstone Group [00:31:07] So one last question, one last question. Goldman Sachs came out this morning and said $100 oil by Q3 and I’ve been extremely bullish. I’ve been calling for over 120 in Q2 and even higher because of all this kind of stuff. I’m going to throw you on the Andrew Crystal Ball if Goldman Sachs is saying one hundred and I’m saying even more. What are your thoughts? I’m not going to hold you to it. You know, we’re not going to have you be buying anything. But what are your thoughts on Boneparth?

 

Andrew Dittmar, Director, Enverus [00:31:45] Fortunately, the various future predictions that have to make oil prices and gas prices are one of them, and we have a team that does that one and all kinds of degrees I never would have attempted. And I really enjoy hearing them talk and run through the numbers on this type of thing. I think relative to the market, we’re actually a firm of maybe slightly bearish on oil, not high-level pricing, but we’re coming in beneath where Goldman and some of these other predictions are so. And personally, I’d really, you know, I look at the deals rather than the prices. And I think we talked about we tend to use drip and then even take a little bit of a conservative look past that. So right, I am bullish on deals at these commodity prices. And so I think that’s. My take going forward.

 

Stu Turley, CEO, Sandstone Group [00:32:31] I’ll tell you, that’s a van. Andrew, you’re going to be running for office next year because that was an excellent political question answer. And by the way, you know, the folks over it and various, I’m going to give them a shout out again. Great. Great job again. Thank you. We’ll see you next quarter, Andrew.

 

Andrew Dittmar, Director, Enverus [00:32:48] I do appreciate you are always looking forward to us and great questions. Enjoy the chat. Thanks so much for having me on.

 

 

 

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