FINANCING OIL AND GAS ACQUISITIONS

• Jurisdiction: United States

Oil and Gas Acquisitions
(Nov 1995)
CHAPTER 10C
FINANCING OIL AND GAS ACQUISITIONS
D. Martin Phillips
EnCap Investments L.C.,
Houston, Texas

EnCap Lines Of Business

Corporate; Finance; Private Placements,; M&A & Advisory; $1.2 Billion	Equity; Fund; Equity; Financing; $100MM	EnCap Tenneco; Gas Fund; Debt; Financing; $100MM
Producing Property; Acquisition Fund; $150MM

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Selected Transparencies

Omitted From Electronic Version

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Traditional Sources of External Financing

1. Commercial Banks (NationsBank, Chemical/TCB, etc.)

2. Insurance Companies (Lincoln National, Travelers, etc.)

3. Pension and other Tax-exempt Funds (General Electric, IBM, etc.)

4. Public Capital Markets

Non-traditional Sources of External Financing

1. Merchant Banks (Prudential Capital, DLJ, etc.)

2. Industrial or Commercial Finance Companies (G.E. Capital).

3. Commodity Finance Companies (Tenneco & Enron).

4. Specialized Oil and Gas Mezzanine Funds (EnCap, TCW, etc.)

5. Other Industry Partners.

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Current Attitudes of Institutions Toward Oil and Gas Investments

> The public market remains difficult for the small to medium sized independent.

> Capital in certain sectors of the private markets is pursuing the oil and gas sector more aggressively than it has in several years. (banks, mezzanine lenders)

> From a product pricing perspective, the institutions view the current environment as having more upside potential than downside risk.

> The institutional investment community still requires knowledgeable and experienced operators with proven track records.

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Oil & Gas Capital Sources

Current Participation Levels

Commercial Banks ???

Institutional Investors ?

Mezzanine Lenders ??

Production Payment ?

Financiers

Equity Sources ???

ENCAP INVESTMENTS L.C.

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Oil and Gas Industry Risk Spectrum

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Oil & Gas Capital Sources

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EnCap Equity Fund

> Size: $100 Million

> Focus: Provide financing for U.S. Oil and Gas projects on an equity basis.

> Project Types: Acquisition of reserves, development drilling opportunities and pipeline and gas processing projects.

> Transaction Size: $2 Million to $15 Million

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> Provide...