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Energy Lender Price Survey
Q4 2014
Q4/14 Overview
We are pleased to present Macquarie Tristone’s Quarterly Energy Lender Price Survey, a commodity pricing
poll of energy reserve-based lenders. Our survey of energy lenders’ price forecasts covers a broad spectrum
of regional, U.S. national and international banks that engage in energy reserve-based lending (“Participating
Banks”). This quarter’s survey includes 39 Participating Banks.
Base Case Results
For 2014, the Q4/14 Survey indicates a mean Base Case West Texas Intermediate (“WTI”) oil price forecast of
$78.53/BBL and a mean Base Case Henry Hub (“HH”) gas price forecast of $3.62/MMBtu. Our survey of
Brent-based oil price forecasts shows a mean Base Case of $84.04/BBL. The five-year trend shows a
decreasing forward price deck for oil and increasing forward price deck for gas, with average 2018 oil and gas
price forecasts of $76.11/BBL, $77.62/BBL and $4.03/MMBtu, for WTI, Brent and HH, respectively.
70% of respondent’s do not escalate prices past 2018 and price are capped at means of $76.91BBL,
$78.68/BBL and $4.53/MMBtu, respectively. The average discount rate used by Participating Banks is 9% for
Base Case oil and for Base Case gas, unchanged from last quarter’s average. The average discount rate for
Brent is 9%. Operating costs on average are escalated 0.6% per year for WTI, for Brent, and for HH.
Participating Banks each consider proved reserve categories to different extents, but lenders who only
consider proved developed producing reserves average an advance rate of approximately 65%.
4th Quarter 2014 Price Survey: Mean of 39 Participating Banks – Base Case
Oil ($/BBL) - WTI
Oil ($/BBL) - Brent¹
Gas ($/MMBtu) - Henry Hub
2014
78.53
84.04
3.62
2015
77.21
82.00
3.69
2016
76.24
79.72
3.80
2017
76.01
78.36
3.91
2018
76.11
77.62
4.03
2019+ Esc.
0.7%
0.5%
1.5%
Cap
76.91
78.68
4.53
LOE Esc.
0.6%
0.6%
0.6%
9%
9%
9%
Discount Rate
1
Mean of 5 Participating Banks
MacquarieCapital ~ PAGE 1
Current WTI Oil Pricing – Base Case ($/BBL)
$60
2013
$80
$100
2014
$70.00
2015
$78.53
$70.00
2016
2018
High
Mean
$84.71
$77.21
$70.00
2017
$86.89
$76.24
$70.00
$76.01
$70.00
$76.11
$84.00
$85.75
$87.00
Low
Current Brent Oil Pricing – Base Case ($/BBL)
$60
2013
$80
$100
2014
$77.00
2015
$84.04
$76.00
2016
$74.00
2017
Mean
$91.00
$88.60
$78.36
$71.00
High
$82.00
$79.72
$73.00
2018
$94.20
$86.80
$77.62
$86.10
Low
Current HH Pricing – Base Case ($/MMBtu)
$2.00
2013
$3.00
$4.00
$5.00
2014
$3.25
2015
$3.45
2017
$3.50
2018
$3.50
High
Mean
PAGE 2 ~ MacquarieCapital
Low
$4.25
$3.69
$3.25
2016
$4.00
$3.62
$4.50
$3.80
$3.91
$4.03
$4.50
$4.50
$6.00
Base Case to NYMEX Trends
Base Case Q4/14 vs. NYMEX as of October 15, 2014
We compared the average Base Case against NYMEX futures pricing as of October 15, 2014, as shown
below. Base Case results for WTI average 103% of NYMEX WTI futures in 2014, and Base Case results for
Brent average 97% of NYMEX WTI futures in 2014; Base Case results for WTI and Brent average 92% and
96%, respectively, in 2018.
When compared with NYMEX futures pricing, the average Base Case results for gas were 94% of NYMEX HH
futures in 2014 and 95% in 2018.
MacquarieCapital ~ PAGE 3
Quarter-to-Quarter Trends
Quarter-over-Quarter Pricing Trends – Base Case
Compared to last quarter’s Survey, front-year pricing decreases by 3.0% for oil and 1.5% for gas. In the fifthyear, the forecast decreases by 0.8% for oil and by 1.2% for gas.
Oil ($/BBL) - WTI
Q3/14
1
Q4/14
Oil ($/BBL) - Brent¹
% Increase/
(Decrease)
Q3/14
Gas ($/MMBtu) - Henry Hub
% Increase/
Q4/14 (Decrease)
Q3/14
Q4/14
% Increase/
(Decrease)
Front-Year
81.00
78.53
-3.0%
82.60
84.04
1.7%
3.68
3.62
-1.5%
Second-Year
79.29
77.21
-2.6%
80.40
82.00
2.0%
3.74
3.69
-1.5%
-1.5%
Third-Year
77.65
76.24
-1.8%
78.00
79.72
2.2%
3.86
3.80
Fourth-Year
76.83
76.01
-1.1%
76.40
78.36
2.6%
3.96
3.91
-1.3%
Fifth-Year
76.75
76.11
-0.8%
75.60
77.62
2.7%
4.08
4.03
-1.2%
Sixth-Year and Beyond
0.7%
0.7%
N/A
0.0%
0.5%
N/A
1.5%
1.5%
N/A
Cap
76.75
76.91
0.2%
75.40
78.68
4.3%
4.55
4.53
-0.3%
Mean of 5 Participating Banks
Quarter-to-Quarter Base Case Oil (WTI) and Gas (HH) Pricing Trends
$82.00
$/BBL
$80.00
$78.00
$76.00
$74.00
2014
2015
Q1/14
Q2/14
2016
Q3/14
2017
Q4/14
2018
$/MMBtu
$4.50
$4.00
$3.50
$3.00
PAGE 4 ~ MacquarieCapital
2014
2015
Q1/14
2016
Q2/14
2017
Q3/14
2018
Q4/14
Sensitivity Case Results
The Q4/14 Survey also includes a Sensitivity Case, which represents the lenders’ low or conservative price
decks. Of the 39 Participating Banks, 35 banks provided a Sensitivity Case for WTI and HH, which averages a
21% discount to Base Case lending policies for oil and 20% discount to Base Case lending policies for gas
over the five-year strip. Four banks provided a Sensitivity Case for Brent, which averages an 17% discount to
the Base Case pricing over the five-year strip.
4th Quarter 2014 Price Survey: Mean of 35 Participating Banks – Sensitivity Case
Oil ($/BBL) - WTI
Oil ($/BBL) - Brent¹
Gas ($/MMBtu) - Henry Hub
2014
62.16
69.76
2.84
2015
2016
61.42
60.56
67.90
65.66
2.93
3.06
2017
2018
60.59
60.61
64.25
64.25
3.15
3.23
2019+ Esc.
Cap
LOE Esc.
0.7%
62.26
0.3%
0.7%
65.00
0.3%
1.2%
3.61
0.3%
9%
9%
9%
Discount Rate
1
Mean of 4 Participating Banks
Current Oil (WTI) Pricing – Sensitivity Case ($/BBL)
$40
2013
$60
$80
$100
2014
$53.50
2015
$52.00
2016
$48.75
2017
2018
High
Mean
$62.16
$61.42
$60.56
$72.10
$68.40
$68.91
$54.00
$60.59
$70.00
$54.00
$60.61
$70.00
Low
MacquarieCapital ~ PAGE 5
Current Oil (Brent) Pricing – Sensitivity Case ($/MMBtu)
$40
2013
$60
$80
$100
2014
$63.58
$56.00
High
Mean
$74.00
$64.25
$57.00
2018
$75.80
$65.66
$59.00
2017
$78.20
$67.90
$61.00
2016
$80.10
$69.76
$62.00
2015
$73.30
Low
Current Gas Pricing – Sensitivity Case ($/MMBtu)
$2.00
2013
$3.00
$4.00
2014
$2.48
2018
High
Mean
PAGE 6 ~ MacquarieCapital
$3.75
$3.06
$2.30
2017
$3.50
$2.93
$2.31
2016
$3.50
$2.84
$2.34
2015
$2.50
Low
$3.15
$3.23
$3.75
$3.83
$5.00
Participating Banks
Macquarie Tristone thanks the following banks for their participation in this quarter’s survey.
Amegy Bank of Texas
FirstCapital Bank of Texas, N.A.
BancFirst
Frost Bank
Bank of Texas
IBERIABANK
Bank SNB
Independent Bank
BB&T
ING Capital LLC
BBVA Compass
Mizuho Bank, Ltd.
BDC
Natixis
BMO Capital Markets
NBH Bank, N.A.
Cadence Bank
Platinum Bank
Canadian Western Bank
RBC Capital Markets
Capital One, N.A.
Regions Bank
CIT
Santander Bank
Citi
Société Générale
Citibank
TD Securities
Comerica Bank
Texas Capital Bank
Community National Bank
US Bank
Crédit Agricole
Wells Fargo
DNB Bank ASA
West Texas National Bank
First Interstate Bank
Whitney Bank
First Tennessee Bank
MacquarieCapital ~ PAGE 7
Macquarie Tristone Contacts – Houston
Rob Bilger
Vice Chairman
[email protected]
713-651-4222
Krishna Desai
Associate
[email protected]
713-651-4215
About Macquarie Tristone
Macquarie Tristone has completed more than 300 energy asset packages valued at over US$28 billion since 2001. As a leading A&D team, we provide advisory services in
energy asset transactions worldwide to a range of clients in the oil and gas energy industry.
With a sophisticated suite of asset divestiture processes, coupled with superior senior-level industry relationships, Macquarie Tristone brings together an unparalleled
combination of disciplines in engineering, geoscience and economics. Macquarie Tristone’s expertise extends across all phases of the divestiture process, including, deal
strategy, financial and value analysis, technical evaluations, buyer identification and qualification, and other deal-related logistics.
Combined with Macquarie's global resources activities, the result is a seamless, integrated offering, providing top-tier financial and execution experience with superior,
specialized technical expertise.
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www.macquarietristone.com
PAGE 8 ~ MacquarieCapital