IPAA Private Capital Conference Stroud Energy, Inc. - PowerPoint PPT Presentation

Loading...

PPT – IPAA Private Capital Conference Stroud Energy, Inc. PowerPoint presentation | free to download - id: 35608-MGUwM



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

IPAA Private Capital Conference Stroud Energy, Inc.

Description:

Stroud was fully drawn on our two facilities with Wells Fargo no 'dry powder' ... Stroud drilled some of the most productive Austin Chalk wells in company history ... – PowerPoint PPT presentation

Number of Views:56
Avg rating:3.0/5.0
Slides: 21
Provided by: ipaa
Learn more at: http://www.ipaa.org
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: IPAA Private Capital Conference Stroud Energy, Inc.


1
IPAA Private Capital ConferenceStroud Energy,
Inc.
Patrick J. NoyesJanuary 2007
2
Early History
  • Formed in 1985 with the purchase of the Stroud
    Prue Sand Unit in Oklahoma. In 1995, purchased
    the Apache Canyon field (coal bed methane) in
    Raton Basin of Colorado.
  • In 2000, relocated company to Ft. Worth, hired
    new management team and refocused efforts on
    horizontal drilling program in Austin Chalk
  • Entered into a 50MM mezzanine facility with
    Mirant (subsequently increased to 100MM) to
    finance Austin Chalk development
  • During 2002, Board decided to replace management
    team in order to take the company in a new
    direction
  • Mr. Noyes joined as President and CEO in February
    2003 with a two point strategy for growth
  • Restructure the capital
  • Diversify the asset base

3
New Management Team
  • At 2002YE Stroud had
  • Total Proved Reserves 72.9 Bcfe (99 Austin
    Chalk)
  • Daily Production 12.5 MMcfe per day (net to
    Stroud)
  • 64MM of Mezzanine Debt
  • Management developed a new strategy to help
    diversify and grow the company
  • Continue successful drilling in Austin Chalk
  • Diversify into new areas where management has
    expertise (Barnett Shale and East Texas) through
    reserve and acreage acquisitions
  • Apply advanced drilling and completions
    technology
  • Generate large inventory of drilling locations
  • In June 2003, Stroud purchased the mezzanine
    facility from Hydrocarbon Capital, largely
    financed by a Wells Fargo credit facility
  • Stroud was fully drawn on our two facilities with
    Wells Fargo no dry powder
  • In order to fund growth capital for expansion
    into new areas, the Board decided to bring in a
    major private equity partner

4
Private Capital Provider (EnCap Investments)
  • In January 2004, EnCap Energy Capital Fund IV
    invested 27 million in the form of redeemable
    preferred stock
  • EnCaps equity facilitated the expansion into new
    areas and accelerated the drilling program
  • Stroud chose EnCap Investments for several
    reasons
  • Capacity to pursue large acquisitions
  • High-level strategic/corporate guidance
  • Risk management
  • Source of opportunities / deal flow
  • Ultimately partnership with EnCap allowed
    management to achieve its objectives
  • The EnCap/Stroud Partnership was helpful from a
    risk management standpoint but supportive of
    management recommendations on drilling and
    acquisitions

5
Stroud Picture (2002)
  • Highly leveraged with Mirant mezzanine facility
  • Board decided to replace the management team and
    move in a new direction

6
Stroud Picture (2002-2003)
  • In 2003, Stroud experienced downward revisions to
    reserves in the Austin Chalk, specifically
    Washington, Burleson and Fayette Counties
  • As a result, management redirected capital
    resources to Grimes County (Austin Chalk) and
    East Texas

7
Stroud Picture (2002-2004)
  • In 2004, Stroud drilled some of the most
    productive Austin Chalk wells in company history
  • The 2004 values include a 35MM acquisition of
    Barnett Shale properties with 23.5 Bcfe of proved
    reserves (the transaction closed in early 2005)

8
Stroud Picture (2002-2005)
  • In 2005, Stroud raised 173MM through a 144A
    private placement
  • Proceeds were used to pay down bank debt, give
    liquidity to shareholders and general corporate
    needs
  • The 2005 values include a 61MM acquisition of
    Barnett Shale properties with 27.9 Bcfe of proved
    reserves (the transaction closed in early 2006)

9
Core Areas Of Operations
East Texas (16 Bcfe) Harrison, Panola and Rusk
Counties
Ft. Worth Basin/Barnett Shale (70 Bcfe) Denton,
Johnson, Parker and Tarrant Counties
Pro Forma As of 12/31/05 Total Proved
Reserves 159 Bcfe Natural Gas 96 Pre-tax
PV-10 479 MM R/P Index (1) 14.7 Operated 99
Core Areas (Pro forma as of 12/31/05) Gross
Developed Acres 41,059 (34,981 net) Gross
Undeveloped Acres 37,446 (29,065 net) Drilling
Locations 204 (65 PUDs)
Central Gulf Coast (72 Bcfe) Brazos, Burleson,
Fayette, Grimes, Lee and Washington Counties
  • Stroud statistic calculated as total proved
    reserves of 159.4 Bcfe / 2005 production of 10.8
    Bcfe.

10
Core Operations Central Gulf Coast
  • Production is in the Giddings Field from the
    Austin Chalk formation
  • Interest in 50 gross wells (41.6 net), with
    average working interest of 83
  • 41 total drilling locations (25 proved
    undeveloped drilling locations)
  • 2.4 Bcfe average reserves per completion
    Grimes County
  • Average drilling completion cost of 3.9MM
    Grimes County
  • Developed acres 30,162 gross (26,365 net)
  • Undeveloped acres 13,400 gross (11,253 net)

Brazos
Grimes
Burleson
Lee
Washington
Fayette
11
Core Operations Ft. Worth Basin
  • Largest natural gas field in Texas
  • Advanced drilling and completion techniques
    resulted in increases in productivity and
    reserves
  • Interest in 50 gross wells (41.1 net), with
    average working interest of 82
  • 84 total drilling locations (24 proved
    undeveloped drilling locations)
  • 2.2 Bcfe average reserves per horizontal
    completion
  • Avg. horizontal drilling completion cost of
    2.5MM
  • Developed acres 5,561 gross (4,788 net)
  • Undeveloped acres 14,405 gross (11,618 net)

Denton
Parker
Tarrant
Johnson
12
Core Operations East Texas
  • Cotton Valley Sand formation was primary target
    in East Texas Basin
  • Interest in 20 gross wells (13.5 net), with
    average working interest of 68
  • 79 total drilling locations (16 proved
    undeveloped drilling locations)
  • 1.3 Bcfe average reserves per completion
  • Average drilling completion cost of 1.4MM
  • Developed acres 4,694 gross (3,640 net)
  • Undeveloped acres 2,290 gross (1,837 net)

Harrison
Panola
Rusk
13
Reserve Base Overview
14
Production Profile
  • Estimate was management projection.

15
Operational Performance
  • Strouds accomplishments under new management
  • Drilled 51 out of 51 successful wells (through
    December 31, 2005)
  • Production increased 140 from 12.5 MMcfe/d in
    2002 to 29.7 MMcfe/d in 2005
  • Reserves grew 120 from 72.9 Bcfe in 2002 to
    159.4 Bcfe in 2005
  • Developed 204 drilling locations and 65 PUDs on
    properties
  • Acquired over 51 Bcfe of proved reserves and
    104MM of PV10 value in the Barnett Shale

16
144A Offering
(Results)
Issuer Stroud Energy, Inc. Offering
Type 144A/Reg D Private Placement
Offering Shares Offered 4.7 MM primary, 2.7 MM
secondary Shares Sold 6.3 MM primary,
4.6 MM secondary Offering Size 111,000,000
Actual Size 173,000,000 Offering
Price 14.00 - 16.00 Actual Price
16.00 Pro Forma Market Capitalization 220
million (mid-range) Actual PF Market
Capitalization 260 million (top of
range) Book Running Placement Agent Raymond
James Co-Placement Agents A.G. Edwards, Petrie
Parkman
17
Range Resources Merger
  • After the closing of the 144A offering, but prior
    to the initial public offering, Range approached
    Stroud regarding a potential merger
  • Ranges offer (cash and/or stock) valued Strouds
    stock at 350MM (20.50/share)
  • Strouds 144A shareholders, who purchased stock
    for 16.00 per share 9 months earlier, realized a
    28 holding period return on their investment
  • Strouds Barnett Shale assets were a strategic
    fit for Range, increasing its Barnett Shale
    acreage to approximately 46,000 acres (gross) and
    adding 182 drilling locations
  • With Strouds additional leasehold, Range planned
    to add 3 more rigs in the Barnett Shale

18
Equity Returns
  • When EnCap entered the picture in January 2004,
    the common equity of the Stroud shareholders was
    valued at 35MM
  • At the 144A offering in September 2005, these
    shareholders received 68MM from the sale of
    secondary shares and retained 5.4 million shares
    of common stock
  • Coincident with the Range merger, the original
    Stroud shareholders exchanged their 5.4 million
    shares for cash and/or stock worth 111MM

19
Summary
  • Successfully implemented initial strategy
  • 100 drilling success rate in all areas
  • Built meaningful positions in three attractive
    core areas of operation
  • Enhanced reserve recoveries by implementing
    advanced technologies
  • Created large inventory of drilling prospects
    with demonstrable success
  • EnCap investment facilitated expansion into
    Barnett Shale and East Texas and accelerated
    drilling program
  • Risk management and capital markets expertise
    invaluable to growth and ultimate exit
  • Increased value and improved liquidity for
    shareholders through 144A offering
  • Exited in opportune market, creating significant
    value for shareholders and management

20
IPAA Private Capital ConferenceStroud Energy,
Inc.
Patrick J. NoyesJanuary 2007
About PowerShow.com