Midcontinent E&P Asset Buyers Sticking To Shopping Lists

OKLAHOMA CITY—Upstream oil and gas asset packages are increasingly being carved into a la carte offerings to attract winning bidders, according to Jason Reimbold, managing director of E&P asset-marketer BOK Financial Securities Inc.

In the past, most offerings went to a single winning bidder. “It was an exception in years past where … an offering was split between a couple of buyers, [each] interested in pieces,” Reimbold told attendees at Hart Energy’s recently held DUG Midcontinent conference and exhibition.

Today, “the exception is finding a single buyer for an entire asset as opposed to selling the asset in strategic lots,” he said.

“That seems to be where the market—for now—has migrated.”

Click here for Jason Reimbold’s full presentation at
Hart Energy’s Midcontinent Conference & Exhibition.

Driving this is prospective buyers that have “the wherewithal and the mandate to make acquisitions.” They want details, details, details.

“The parameters are very specific and, if the square peg does not fit exactly within those parameters, it’s not a buy for them,” Reimbold said. “That has resulted in many of our offerings being sold to multiple buyers and [often] not simply as many as two; some as many as five at this point, actually.”

That deals are getting done at all, though, is a point to be made in the midst of a dearth of closings, he added. “We would like to get back to the times when we were selling to just one. However, we’re going to figure out how to be successful given the conditions.”

In the first three quarters of 2019, 33 packages in the Scoop/Stack were put on the market and 10 closed. Overall, of 74 Midcontinent offerings in that timeframe, 16 closed.

He noted that bids are being made. “We have not yet put an asset on the market in Oklahoma that we failed to receive multiple competing offers for,” he said.

The greatest value has gone to the core Stack acreage at the intersection of Blaine, Canadian and Kingfisher counties, Okla., averaging between $8,000 and $10,000 an acre. In the $6,000 to $8,000 range has been the perimeter of that area as well as the core Scoop play in central Grady County, straddling some of McClain County in Oklahoma.

“That sweet spot” that fetches $8,000-plus “has shrunk,” Reimbold said.

Despite the slowdown in transacting, “we have achieved some consideration beyond PDP in everything we transacted out here the last 18 months,” he added.

“That’s taken some doing and these are the multiple-buyer scenarios that I mentioned earlier.”

The industry can’t prop up oil and natural gas prices, he said, “but what we can do is figure out how to be successful, whatever the conditions may be.”