Energy Industry Data and Trends Supplemental Slides: The Art of the Share Buyback. October 2017

Transcription

1 Energy Industry Data and Trends Supplemental Slides: The Art of the Share Buyback October 2017

2 Table of Contents Share Buyback Slides Pg. 3 Supplemental Market Slides Pg. 15

3 The Art of the Share Buyback

4 Allocation of Capital Flow Chart Source: EnerCom Inc.

5 M&A Deals in Excess of $2.5 Billion YTD Source: Bloomberg, EnerCom Inc.

6 Most Effective Use of E&P Free Cash-Flow 70% 60% 50% 40% 30% 20% 10% 0% Pay down debt Buyback shares Distribute capital back to investors Grow production Do nothing Focus on M&A Source: EnerCom Inc.

7 APC EV/Reserves vs. Peer Group $35 $30 $25 $20 $15 $10 $5 $0 APC EV/ Reserves Peer Valuation Source: Company Filings, EnerCom Inc.

8 Cost per BOE APC EV/Reserves vs. F&D Costs $35 $30 $25 $20 $15 $10 $5 $0 APC EV/ Reserves APC F&D Source: Company Filings, EnerCom Inc.

9 Cost per BOE APC EV/Reserves Vs. M&A Deals $80 $70 $60 $50 $40 $30 $20 $10 $0 APC EV/ Reserves Average Acquisition Cost without Permian Deals APC F&D Average Acquisition Cost of Permian Deals Source: Company Filings, Bloomberg, EnerCom Inc.

10 Percent of E&P Companies Expected to Outspend in % 50% 40% 30% 20% 10% 0% 0% - 24% 25% - 49% 50% - 74% 75% or More Source: EnerCom Inc.

11 APC EV/Reserves vs. M&A Deals $50 $49 $48 $48.52 $48.99 $4.46 $47 $46 $45 $44 $43 $43.55 Anadarko's share price as of September 15 ($43.55) $43.35 $42 $41 $40 Share Buyback (Actual) Debt Reduction (Hypothetical) Dividend (Hypothetical) Drilling Program (Hypothetical) Source: Company Filings, Bloomberg, EnerCom Inc.

12 Price-to-Cash-Flow per Share Debt and its Effect on Multiples 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 0% 200% 400% 600% 800% 1000% 1200% 1400% 1600% Debt-to-Market Cap Linear (All Companies) Linear (Low Debt Companies) Linear (High Debt Companies) Source: Company Filings, Bloomberg, EnerCom Inc.

13 Cost per BOE APC EV/Reserves Now Exceeding F&D $25 $24 $23 $22 $21 $20 $19 $18 APC EV/ Reserves APC F&D Source: Company Filings, Bloomberg, EnerCom Inc.

14 APC AR AXAS CLR COG CPE CRZO CXO DVN ECA ECR EGN EGY EOG EQT FANG GPOR GTE HES HK LPI MRO MTDR MUR NBL NFX OAS OXY PDCE PE PXD QEP REN RICE RRC RSPP WPX XEC EV/Reserves vs. 1-Year F&D Costs $60 $50 $40 $30 $20 $10 $- EV/Reserves 1-Yr F&D Cost Source: Company Filings, Bloomberg, EnerCom Inc.

15 Supplemental Market Slides

16 FUNDING A CAPITAL INTENSIVE INDUSTRY In 2016, Companies Raised More Than $110 Billion in Capital U.S. and Canadian Offerings YTD Initial Public Offerings $5,710MM $6,670MM $8,210MM $1,390MM $3,230MM $2,250MM Follow-on Offerings $18,350MM $20,260MM $22,380MM $24,540MM $42,330MM $14,590MM Debt Offerings $78,634MM $53,783MM $73,586MM $107,155MM $64,634MM $42,280MM Totals $102,694MM $80,713MM $104,176 MM $133,085MM $110,194MM $59,070MM FUNDING $220B/ A CAPITAL $123B/ $264B/ U.S. & Canada M&A Announcements Global M&A Announcements 865 deals 770 deals 1040 deals INTENSIVE $319B/ INDUSTRY $215B/ $373B/ 1,326 deals 1,303 deals 1,694 deals $102.9B/ 492 deals $305.1B/ 1,021 deals $135.5B/ 549 deals $286.4B/ 1,078 deals $118.3B/ 483 deals $159.9B/ 763 deals

17 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Number of Wells WTI Price Drilled, Completed, and DUC Wells DUC Drilled Completed WTI Price Source: EIA, Baker Hughes Industries, EnerCom Inc.

18 Million Tons Total U.S. Sand Demand E 2018E Source: Credit Suisse

19 Yield to Maturity (Percent) U.S. Treasury Yields /1/2005 8/1/2006 8/1/2007 8/1/2008 8/1/2009 8/1/2010 8/1/2011 8/1/2012 8/1/2013 8/1/2014 8/1/2015 8/1/2016 8/1/2017 US 30-Year Bond US 10-Year Bond US 2-Year Bond

20 S&P 500 vs. 360-Day MAVG (Long-Term) 3,100 S&P Day MAVG 2,600 2,100 1,600 1, Source: Bloomberg.

21 MBOPD Key Basins Driving Oil Production Growth Texas and North Dakota Crude Oil Production 4,000 3,500 Texas Field Production of Crude Oil North Dakota Field Production of Crude Oil 3,000 2,500 2,000 Permian and Eagle Ford 1,500 1, Bakken and Three Forks Source: EIA.

22 U.S. Oil and Petroleum Product Supplied Jul-17 U.S. oil demand was down 2.3% from Jun-17 and up 1.6% from Jul-16 22,000 Product Supplied of Crude Oil and Petroleum 12-Mo Avg 21,000 20,000 Thousands of Barrels per Day 19,000 18,000 17,000 16,000 Source: EIA, EnerCom

23 Oil Price / Natural Gas Price Energy Equivalent Pricing 60.0 X 50.0 X 40.0 X 30.0 X Ratio of 18.1x on 10/18/17 is above 6:1 ratio 20.0 X 10.0 X Favorable to Oil 0.0 X Favorable to Gas Current Oil/Gas Ratio Energy Equivalent (6:1) Source: Bloomberg, EIA, EnerCom.

24 Active NYMEX Crude Oil Contracts YTD 3,000,000 $120 2,500,000 2,440,472 $100 2,064,365 2,000,000 $80 1,500,000 1,671,345 1,615,844 1,457,729 1,430,155 1,473,345 1,361,258 1,328,317 1,189,046 1,190,543 1,193,065 $60 1,000, ,196 $40 500, , , , ,947 $20 0 $0 Active Contracts CL1 Prices Sources: Bloomberg

25 $/Bbl Oil Prices WTI and Brent $160 WTI Brent $140 $120 $100 $80 $60 $40 $20 Source: Bloomberg.

26 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Billion Cubic Feet per Day U.S. Natural Gas Production Average daily production in the Lower 48 was up 1.95% in February-17 from January-16 and down 3.38% from February Dry Gas Production Production 12-Mo Avg Source: EIA. Average Daily Production

27 Billion Cubic Feet per Day U.S. Natural Gas Consumption YTD July 2017 Natural Gas Consumption -5.0% over Vehicle Fuel +11.1% Electric Power -14.4% Vehicle Fuel Industrial +1.7% Electric Power Industrial Commercial 20 Commercial -1.0% Residential 10 Residential -2.9% Source: EIA and EnerCom YTD 2017 YTD

28 Active Natural Gas Contracts YTD 1,400,000 1,291,380 1,250,847 1,324,060 $ ,200,000 1,164,815 $ ,000, , ,704 1,011, , ,249 $ , , , ,404 $ , , , , , , , ,562 $ ,000 $ $- Active Contracts NG1 Prices Sources: Bloomberg

29 $1.61 $1.37 $1.29 $1.75 $1.58 $1.31 $1.31 $2.73 $2.56 $2.67 $2.24 $1.88 $1.92 $2.64 $2.73 $2.92 $2.66 $2.65 $2.48 $2.65 $2.52 $2.68 $2.22 $1.87 $1.79 $2.62 $2.70 $2.78 $2.69 $2.57 $2.43 $1.77 $2.08 $2.12 $2.11 $1.96 $2.14 $2.30 $3.02 $2.84 $2.95 $2.53 $2.50 $/MMBtu $2.95 $3.06 $3.12 $3.05 $3.02 $2.88 $2.87 $2.73 $2.75 $2.85 $3.03 $2.99 $3.05 $2.91 $2.88 $2.99 $5.86 U.S. Regional Natural Gas Prices $7.00 $6.00 $5.00 $4.00 Q Q Q Q Q Q Q Q Q Q Q Q $3.00 $2.00 $1.00 $- Rocky Mtn. Average (1) West Texas Average (2) CA Border Average (3) Henry Hub NY Hub Notes: (1) Average of 3 Rocky Mountain hubs (2) Average of 2 West Texas hubs (3) Average of 3 hubs delivering gas to California border

30 $ / MMBtu Regional Gas Price Differentials $0.40 $0.20 $0.20 NY Hub Henry Hub MidCon Avg Rocky Mtn Avg West TX Avg $0.00 $0.00 $0.00 $0.07 ($0.20) ($0.18) ($0.40) ($0.34) ($0.33) ($0.37) ($0.60) ($0.58) ($0.80) ($1.00) ($1.20) ($1.40) ($1.40) Average (1/2/01-10/18/2017) 10/18/2017 ($1.60) Source: Bloomberg, EnerCom.

31 Average Natural Gas Differentials to Henry Hub Differential to Henry Hub $1.50 $1.00 $0.50 $ YTD $(0.50) $(1.00) $(1.50) $(2.00) $(2.50) $(3.00) West TX Avg Rocky Mtn Avg MidCon Avg NY Hub