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Transaction Trends in Oil and Gas: 2015 mid-year Energy deals update - August 6, 2015
While the continued low oil price environment stalled deal-making in the upstream space during the first half of 2015, the midstream segment continues to engage in deal-making, particularly in corporate and mega-deals. Continued commodity price volatility pushed both corporate and financial investors to the side lines in anticipation for more clarity on the direction of the commodity prices.
Halfway through 2015, several tax themes have emerged and continue to develop. After serious consideration of "corporate-only" tax reform, the conversation has turned to an attempt to modernize the US international tax regime in a way that would benefit not only corporations but pass-through entities and the broader US economy. The tax conversations are not taking place in a vacuum but rather are caught up in the overall revenue debate, including the search for ways to pay for a long-term fix to the nation's infrastructure needs. And not to be forgotten, there is still the need to consider already-expire tax extender provisions. Our panelists will discuss the current tax state-of-play and the outlook for the second half of 2015 in the midst of all the change and challenges.
Impairments and related fair value measurements are top of mind for many energy companies given the current price environment. This webcast will provide you with information to help your accounting and reporting teams understand the valuation and impairment trends in the sector, including key assumptions, inputs and other considerations used by many energy companies in assessing long-lived assets for impairment. We will provide you with insights and analysis of recent impairment disclosures in SEC filings specific to the energy sector, and also share perspectives on challenging valuation matters and the road ahead.
US oil and gas deal-making stalled during the first quarter of 2015 as oil price volatility created uncertainty in the industry and pushed buyers to the sidelines. The decrease in M&A activity was particularly evident in the upstream E&P segment which saw a decrease in the number of announced deals by 67% sequentially, and 35% when compared to the same period last year respectively. Shale deals also ticked down as the velocity and magnitude of the commodity price drop shifted the attention away from growth strategies and into cost reductions. The question now is what does this mean for deal-making for the rest of the year?
The oil & gas industry is an asset intensive business which requires continuous capital investment in order to deliver value to its customers and shareholders, even during macro-economic events like we're facing today. Capital Productivity, the ratio of revenue derived from capital deployed, is a measure of that value. Capital Productivity is largely determined by Capital Efficiency -- funding the right projects at the right time, finding off-ramps for those that no longer align with corporate strategy, developing assets at the lowest cost possible, and getting to production faster than the competition.
The energy industry is currently facing challenging dynamics as the price of oil continues to fluctuate. Companies are being forced to make many changes to quickly restructure businesses and reduce operating expense to maintain earnings and shareholder value. To successfully balance these issues and frame decisions correctly, a forward looking strategy is required to help best position the organization and capabilities to compete as the industry rebounds. Join PwC as we discuss how companies can evaluate their organizational strategies and build new operating models to prepare for when the price of oil stabilizes.
With the recent fluctuations in oil prices, the various state and local taxing jurisdictions that have previously prospered as a result of increased revenue bases are now facing possible sharp reductions to those bases. As a result, they will undoubtedly be looking for ways to fill the expected gaps in revenue, and the industry must be prepared for what's to come. On this webcast, we plan to discuss a number of the latest trends and hot topics in state and local tax affecting the oil and gas industry, including recent legislative and regulatory changes, cases and policy decisions, and recent thought leadership.
2014 was a significant year for US deal activity in the oil and gas sector. The US oil and gas deals market experienced unprecedented growth resulting in total deal value increasing by 133% relative to the preceding four year average with 2014 total deal value reaching $322 billion. Additionally, 2014 was an active year in the US capital markets for oil and gas companies. However after an active deals year, recent oil and gas price declines have reintroduced volatility to the oil and gas sector at levels not seen since the financial crisis. The question now is what does this mean for 2015 M&A activity?
Energy companies are under constant pressure to adapt not only to market demands, but environmental tensions, regulatory constraints and stakeholder needs. Across the global landscape, stakeholders are more vocal and challenging, and their interactions with business attracting significant attention. CEOs need to keep their company’s reputation intact and to secure their license to operate. So how can they engage more effectively with their stakeholders and meet shareholder demands? How can they identify and address the issues and risks that cause concern now, and in the future?
There's a new dynamic in Washington as a result of the November elections. The new Republican controlled Congress has changed the political playing field in DC. While we still have a politically divided government, we no longer have a divided Legislative Branch. The Executive Branch remains under Democrat control with its continuing power to issue regulations and executive orders. Over the next two years, we will see a continuing conflict to see who will set the agenda on both taxes and energy. In Congress, we have not only a large number of new Members but also new people in critical leadership positions. All of this change means new possibilities and new challenges.
SEC reporting requirements are on top of mind for many preparers as we approach the close of another calendar year. This webcast will provide you with information to help your accounting and reporting teams prepare for the financial reporting season ahead, including understanding those key areas where the SEC is focusing its attention. We will provide you with insights and analysis of recent SEC comment letter trends specific to the energy sector, and also cover some important tips on how to make interactions with the SEC staff productive and efficient.
The discussion will explore the dynamic levers impacting the current price of oil, and introduce PwC's "stress test" that evaluates financial, operational, commercial, portfolio, and talent factors to reveal the indicators that signal the ability of a company to withstand a period of sustained low prices.
With a mid-term election on November 4, the short-term focus is on electoral issues, but the past eleven months have seen significant tax debates that will resonate as early as a lame-duck legislative session in December and into 2015. The near term holds decisions over tax extender packages, including the Senate's two-year approach and whether any of the House's attempts to make permanent policy can prevail. Webcast panelists will consider the current environment inside the beltway, as well as a comparison of the key aspects of the proposed tax reform proposals on tax rates, depreciation, research activity, and other issues affecting the energy industry.
Our October webcast will highlight key trends in US and inbound Oil and Gas M&A during the last quarter. Unprecedented changes under the Affordable Care Act (ACA) have an impact on all stakeholders in the healthcare system, including employers as benefit plan sponsors.
PwC's Energy practice invites you to join us for a discussion on how companies can leverage existing financial and operational data to understand detailed levels of market, asset, customer and product economics and transaction level profitability. Learn how this can help build strategic and operational capabilities, including new business processes, technologies, decision support models and performance management to deliver and sustain a step change in profitability and financial performance.
Please join us for a global webcast event to discuss the OECD's Action Plan on Base Erosion and Profit Shifting, and what lies ahead for tax policy makers, business and the broader community.
Join PwC transfer pricing specialists for analysis of the anticipated OECD final paper on Transfer Pricing and Country by Country Reporting and of the potential impact on multinational businesses as a result of the changes to Chapter V of the Transfer Pricing Guidelines.
In the unconventional environment, land departments are challenged to manage an ever-growing number of leases and an expanding volume of data within their land systems while keeping pace with accelerated development plans, increased acquisition and divestiture activities, and changing reporting requirements. Concurrently, land organizations are experiencing knowledge loss due to the crew change from an aging workforce of seasoned professionals to the next generation who are struggling to adapt. Both factors are driving the use of increasingly sophisticated technology within and functions. The extensive capabilities of Geographic Information Systems provide a unique way to approach traditional land management activities and a wide variety of other business processes in order to bridge gaps and increase performance.
Join for a discussion of how you can leverage the NIST Cybersecurity Framework to objectively assess your current as well as target security states provided the recent Havex malware attacks on the energy sector in order to drive communication with business leadership to convey strengths, weaknesses, and strategic goals.
Our July webcast highlights key trends in US and inbound Oil and Gas M&A during the first half of the year.
This webcast discusses how the alignment of processes, technology, and behaviors can bridge the gap to provide transparency and efficiency to the management of the well life cycle.
This webcast reviews the three primary human resources technologies that have emerged within the cloud workspace, including discussion on what each offers, how to best prepare employees for such a technology change, and how to make it a part of a holistic cloud plan so executives can manage risk as well as opportunity.
In this webcast PwC and Oracle discuss possible solutions to some of the major challenges affecting the oil and gas industry and the role of knowledge management in building solutions, as well as the new and developing techniques that may driver greater user adoption and assure the ultimate success of a knowledge management program.
This webcast provides an overview of the SASB, an understanding of the Sustainability Accounting Standards for the energy and mining industry, and a discussion of what the standards mean for individual companies.
This webcast focuses on key themes found in the PwC quarterly M&A analysis along with insights on deals done in the past year and what the deal market for 2014 may hold.
This webcast discusses the issues clients are currently facing within materials management, including balancing inventory investment with project and production requirements, identifying and remediating problems with excess project materials, and addressing the end to end materials management process.
In this webcast, PwC and PowerPlan provide an overview of the tangible property regulations including the safe harbor guidance, provide leading practices for implementing the regulations as well as specific review revenue procedures and safe harbor calculations, and highlight how to automate compliance, maximize value and support internal and external audit needs.
This webcast discusses the FASB and IASB recently-published proposal on lease accounting and their impact on the energy industry, specifically focusing on whether drilling contracts are leases, how the proposal interacts with existing guidance on proportional consolidation and oil and gas accounting, and the impact on transportation and storage agreements.
This webcast discusses strategies and approaches for charging intragroup management fees, leading practices for managing double taxation risk in both treaty and non-treaty countries, and opportunities and challenges around avoiding double taxation specific to the energy industry.
On this webcast PwC reviews challenges and business impacts of poor data quality, implementation of an effective master data management strategy, and critical success factors for managing master data efficiently and effectively through data governance.
This webcast provides an industry outlook on how the current land grab is impacting land departments, leading practices for managing land information efficiently and effectively, and considerations for using land data to generate insight and intelligence.