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Timothy Knobloch and Benjamin Thomas James Engineering, Inc. Marietta, Ohio The Merger and Acquisition Report 2006.

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Presentation on theme: "Timothy Knobloch and Benjamin Thomas James Engineering, Inc. Marietta, Ohio The Merger and Acquisition Report 2006."— Presentation transcript:

1 Timothy Knobloch and Benjamin Thomas James Engineering, Inc. Marietta, Ohio The Merger and Acquisition Report 2006

2 Materials Presented Materials are drawn from public sources: press releases, SEC reports, etc. Materials should be viewed as approximately correct. Materials are not being recommended as a basis for decision making, but are presented as useful market information.

3 The Perfect Storm Continues??? Last transmission from the Andrea Gail Shes comin on boys, and shes comin on strong Captain Billy Tyne

4 Presentation Outline Price Drivers Pricing Yardsticks Prime Rate, Gas Price, and Oil and Gas Asset Prices Review of Recent Mergers and Acquisitions Comparison of Recent Mergers and Acquisitions Price Drivers and Pricing Yardsticks

5 Price Drivers Factors Influencing Asset Values Asset Size Cash Flow Daily Production Net Reserves Geographic Location Well Count Risk Miles of Pipeline Operated vs. Non Operated Interests Developed and Undeveloped Acreage Distribution of Reserves

6 Pricing Yardsticks Price Determination Methods Quick Look Multiples Dollars paid per mcfeq Dollars paid per mmcfdeq Multiple of Annual Cash flow Reserve Based Methods % of Discounted Net Cash Flow Discounted Net Cash Flow Hurdle Rates Profit to Investment Ratio Payout

7 Current Rate 8.00%

8 Nymex Natural Gas Futures 12 Month Strip Avg. Price

9 $1.5/mcfe 10 bcfe = $15 Million

10

11 $10MM/mmcfe/d Gross: 1,000 mcfe/d Net (50%): 500 mcfe/d = $5 MM

12

13 Recent Acquisitions and Mergers Great Lakes Acquires Pine Mountain NCL Appalachian Partners Acquires Equitables Pennsylvania and Ohio Assets EnerVest Acquires Belden and Blake –Comparison to Capital C/TPG Chesapeake Acquires CNR/Triana –Comparison to Triana/Nisource

14 Great Lakes Acquires Pine Mtn Price Drivers Asset Size$219 MM Cash Flow $? MM per year Daily Production, Net14.8 mmcfdeq Net Reserves: 40% PDP205 bcfe Geographic LocationVA, WV Well Count 1,872* Miles of Pipeline 277 Acreage 417,000 (1550 loc) *cbm, royalty interest – 1,317 wells wi/royalty – 519 wells, wi only-39 wells

15 Great Lakes Acquires Pine Mtn. Pricing Yardsticks Dollars paid per mcfeq ($219MM/205 bcfe) $1.07 per mcfeq of reserves Dollars paid per mmcfdeq ($219MM/14.8 mmcfdeq) $14.8 million per producing million Multiple of Annual Cash flow ($219MM/?) Unknown – cashflow not available from public data sources

16 NCL Appalachian Partners Acquires Equitable PA/OH Assets Price Drivers Asset Size$147 MM Annual Cash Flow$ ? MM Daily Production10 mmcfd Net Reserves: 90% PDP66 bcfe Geographic Location PA, OH Well Count 1,200 Miles of Pipeline 400 Acreage * *220 proven and probable locations

17 NCL Appalachian Partners Acquires Equitable PA/OH Assets Pricing Yardsticks Dollars paid per mcfeq ($147MM/66 bcfe) $2.22 per mcfeq of reserves Dollars paid per mmcfdeq($147MM/10 mmcfdeq) $ 14.7 million per producing million Multiple of Annual Cash flow ($147MM/$?MM) Unknown – cashflow not available from public data sources

18 EnerVest Acquires Belden and Blake Aug 2005 Price Drivers Asset Size$309 MM* Annual Cash Flow$50 MM(SEC 8K) Daily Production48 mmcfdeq Net Reserves: 77% PDP285 BCFE Geographic LocationOH, PA, NY, MI Well Count 3,650 Miles of Pipeline 1,268 Acreage 712,267 (gross) *$116MM Cash + $192MM Debt ** Gas prices hedged through 2013

19 Enervest Acquires Belden and Blake Aug 05 Price Drivers Dollars paid per mcfeq ($309MM/285BCFE) $1.08 per mcfeq of reserves Dollars paid per mmcfdeq ($309MM/48mmcfdeq) $6.4 million per producing million Multiple of Annual Cash flow($309MM/$50MM) 6.2

20 Belden and Blake Acquisition Buyer Comparison Capital CEnerVest $352$309Asset Size$352$309 Cash Flow, mm/yr $60$50 Daily Prod, mmcfdeq 4548 Net Reserves, bcf355**285** Well Count, operated3,4003,650 Acreage1,118,512712,267 $/mcfeq$0.99$1.08 $MM/mmcfdeq$7.8$6.4

21 Chesapeake Buys Columbia Natural Resources Price Drivers Asset Size$2,950 MM* Annual Cash Flow$?MM Daily Production125 mmcfed Net Reserves70% PDP1,100 BCFE** Geographic LocationOH, PA, NY, WV,KY Well Count 8,200 Miles of Pipeline – 100%6,500 Acreage (9435 locations)4,100,000 * $2,200MM Cash +$750MM Hedging Liabilities ** 1.4 tcfe prob/poss (1316 pud, 6286 poss, 1833 prob)

22 Chesapeake Acquires Columbia Natural Resources Pricing Yardsticks Dollars paid per mcfeq ($2950MM/1100BCFE) $2.06 per mcfeq of reserves (1.4 TCF Prob-Poss) Dollars paid per mmcfdeq ($2950MM/125 mmcfdeq) $18.2 million per producing million Multiple of Annual Cash flow ($2950MM/$?MM) Unknown – cashflow not available from public data sources

23 CNR Acquisition Buyer Comparison Triana Chesapeake 08/200310/2005 Asset Size, $MM$800$2,950 Cash Flow, $mm/yr $97$? Daily Prod, mmcfdeq Net Reserves, bcf1,1001,100 Well Count, operated8,2008,200 Acreage4,000,0004,100,000 $/mcfeq$0.73$2.06 $MM/mmcfdeq$5.5$18.2

24 Buyer Seller Asset Size $MM Daily Prod mmcfd Res. BCFE % PDP $MM Per Mmcfd $ Per Mcfe Range Resources Pine Mountain $ (40%) 14.8$1.07 NCL App Partners Equitable– OH, PA $ (90%) 14.7$2.22 Enervest Belden Blake $ (77%) 6.4$1.08 Chesapeake CNR $2, ,100 (70%) 18.2$2.06 Acquisition Summary

25 The Merger and Acquisition Report What do we know? Every transaction is unique. Every transaction is supported by a reserve report. Every transaction is supported by a team of professional advisors. Asset Preparation Asset Presentation Asset Placement

26 Thank you. Timothy Knobloch and Benjamin Thomas James Engineering, Inc. Marietta, Ohio The Merger and Acquisition Report


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