Mark Carter's Financing Slides
This type of loan allows exploration and production companies to borrow money secured by the discounted present value of their future oil and gas production.
What is Reserve-Based Lending (RBL)?
This process involves delivering electricity, natural gas, or other energy forms from centralized systems to homes, businesses, and industries.
What is energy distribution?
This legal right allows an oil and gas company to extract hydrocarbons from a specific property.
What is the mineral estate or mineral rights?
The value of any oil and gas business depends on these three components of future cash flow.
What are size, timing, and risk?
A loan secured by the discounted present value of an oil and gas company’s future production.
Reserve-Based Lending (RBL)
These investors pool funds from pensions and wealthy individuals to buy controlling stakes in companies, improve their value, and eventually sell for a profit.
What is Private Equity?
Before it can be safely used or transported, natural gas must undergo this process to remove impurities and separate valuable components.
What is gas processing?
Often described as a “bundle of sticks,” this concept represents the collection of rights associated with land ownership.
What is real property ownership?
To model the financials of a well or field, you must forecast volume, price, expenses and CAPEX, and this factor that accounts for uncertainty.
What is risk estimation?
The difference between the present value of cash inflows and outflows over time.
Net Present Value (NPV)
While it can enable “home runs,” this kind of funding can also lead to forced sales or decisions that aren’t in the company’s long-term interest.
What is Private Equity Capital?
The three largest exporters of liquefied natural gas (LNG) in the world are the United States, Australia, and this Middle Eastern country.
What is Qatar?
To determine who owns the minerals under a tract of land, these public documents must be checked in the county where the land is located.
What are county land and property records (or recorded real property transfers)?
If you receive $200 in the future, this calculation tells you what it’s worth today based on a given interest rate.
What is the present value (PV)?
The average rate of return a company must pay its investors for using their capital.
Weighted Average Cost of Capital (WACC)
These are the four main sources of startup or acquisition funding discussed in class—one is debt, and the rest are equity-based.
What are Bank Debt, Personal Cash, Friends & Family Cash, Family Office Cash, and Private Equity?
LNG storage requires specialized tanks that can handle extremely low temperatures, often constructed with multiple layers of this material.
What is insulated steel?
This common legal document grants someone else the rights of a mineral owner to explore for and produce hydrocarbons.
What is an Oil, Gas, and Mineral Lease?
Often called a “simple BFIT forecast,” this document summarizes expected production, prices, revenues, and risk for a well or lease.
What is a reserves sheet?
A unit representing 1,000 cubic feet of natural gas.
MCF
Because oil and gas prices are highly volatile, this financial metric must increase to reflect greater uncertainty in future cash flows.
What is the discount rate?
According to Zhu et al. (2021), LNG facilities and tankers are vulnerable to this kind of intentional human threat.
What are terrorist attacks?
If no well is drilled by the end of this period, the lease will expire.
What is the primary term of the lease?
The acronym “GIGO” reminds analysts that poor data quality produces unreliable results.
What does Garbage In, Garbage Out mean?
A reserve classification meaning the oil or gas is proven and can be economically extracted.
PDL (Proved Developed Lease or Producing)