Wednesday, September 14, 2016

Whatever Happened to Mark Papa? September 14, 2016

What is Mike Papa doing since he stepped down as CEO of EOG? From a closer look at Mike Filloon's recent SeekingAlpha article we have the answer.

His most recent article seems to have been hastily written and is a bit difficult to follow. Mike seems to be highlighting Silver Run on the coattails of Apache and Alpine Run.

From Mike Filloon's article, in Alpine High:
EURs range from 1,100 MBOE to 2,700 MBOE. Apache estimates the play is worth $6,400 per undeveloped acre. This is a base-case scenario as that number could be much higher. In other parts of the play, we are seeing operators purchase acreage from $20,000 to $40,000/acre. Operators that have acquired Delaware acreage this year are EOG (NYSE:EOG), PDC Energy (NASDAQ:PDCE), Diamondback (NASDAQ:FANG), Parsley (NYSE:PE), Concho (NYSE:CXO), WPX Energy (NYSE:WPX), and Silver Run Acquisition (NASDAQ:SRAQU) (NASDAQ:SRAQ).
SRAQU is run by former EOG chief executive and renowned shale driller Mark Papa. He bought 38,000 acres from Centennial Resource Development for $1.38 billion, or $29,000 an acre. Some thought this was a hefty price to pay, but SRAQU could benefit from the Alpine High discovery. Not only could it benefit, but also it is the only levered acreage holder.
I generally don't include ticker symbols in my posts (with some notable exceptions; this is not an investment site) but in this case I have for various reasons).
Silver Run sells under three different ticker symbols. This includes SRAQU, SRAQ and SRAQW. It started as a blank check company for the purpose of bargain hunting for oil and gas assets. An oil glut can be hard on the industry, but it provides an opportunity for those with cash. Assets get cheaper as operators become distressed.
In its IPO, Silver Run Acquisition Corp. raised $450 million in an upsized offering at $10 a share in February of this year. It is sponsored by energy-focused private equity firm Riverstone Holdings LLC. Being a blank check company, SRAQU had no acreage initially. In June of this year, Centennial Resource Development, Inc., an operator in the Permian Basin's Delaware sub-basin, planned to launch an initial public offering (IPO) to raise up to $100 million.
Close readers of the blog might recognize Riverstone Holdings. It's been mentioned on the blog a few times.

The breakeven prices, per the linked article:

And finally, back to Mark Papa:
In summary, Silver Run may be the only way an investor will benefit from the Apache Alpine High find.
Apache has already experienced a significant jump in market cap while Silver Run is still fairly discounted. Silver Run has approximately 12,000 acres in Big Chief and Kimsey.
If the Barnett/Woodford is prospective to its acreage, the uplift could be substantial. Steve Keenan is Apache's Senior VP of North American Unconventional Resources, whose team is credited with the Alpine High discovery. He worked with Mark Papa at EOG for around 15 years before coming to Apache.
Mark Papa is the founder, past chairman and CEO of EOG Resources. He is still on EOG's Board of Directors. Mark Papa is now a partner at Riverstone and the current CEO of Silver Run. It can be interesting how two great careers can meet up again in Alpine High.
Whatever Happened to Randolph Scott? Statler Bros

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