Equal Energy Ltd EQU

MLPs in the Mid-Content

[Nawaralsaadi]

Follows is a list of MLPs I have researched who have operations in Oklahoma, I am also posting their Ebitda multiples to give a quick idea on whether acquiring EQU with their stock at $5+ would be accretive to them:

Mid-Content Energy Partners (MCEP) – Ebitda 14.48 (accretive)
Atlas Resource Partners (ARP) – Ebitda 12.29 (accretive)
LRR Energy (LRE) – Ebitda 4.06 (not accretive)
Vanguard Natural Resoucres (VNR) – Ebitda 7.43 (accretive)
Linn Energy (LINE) – Ebitda 7.64 (accretive)
Legacy Reserves (LGCY) – Ebitda 5.71 (not accretive)
EV Energy Partners (EVEP) – Ebitda 9.48 (accretive)

There might be others, but those are the most prominent that I could find, there is of course a number of large private companies who operate in the Mid-Content; the 5th most active operator in Oklahoma last year (60 wells) was New Dominion, they are focused exclusively on the Hunton (https://www.ogs.ou.edu/OilGas/pdf/2011DrillingHighlights.pdf) There is also a large number of private equity firms focusing on the area such as Riverstone (the backers of Eagle Energy), also several of the MLPs above are backed by private equity firms.

As I have mentioned in the past, Canadian investors are not aware of the dynamics of the M&A market in the US, they look at failed strategic reviews of companies with mainly resource style assets in Canada and they conclude that EQU review would fail because others in Canada have failed. Equal Hunton and Mississippian assets are a different animal, they appeal to MLPs and private equity, most of the MLPs I mentioned above are “actively” searching to acquire more assets, the market for MLPs is hot in the US right now due their yield characteristics, 3 of the 7 MLPs I highlighted above came public less than 12 months ago.

Scotia Waterous is one of the most the most prominent M&A houses in the oil and gas sector in the US; just like investors, they make the most money if they secure the best deal, I am glad they are on our side and working actively to promote our assets to the above class of buyers among others.

Regards,
Nawar

[dbeaude]

I have worked closely with Scotia Waterous a couple of years ago to package a retail energy company. It begtins with a CIM document that they circulate to a large list of companies that they feel would be interested. the CIM is a brief on the company's various perspectives. Once they have a list of interested parties they bring the two parties together and Waterous provides the potential

[dbeaude]

I have worked closely with Scotia Waterous a couple of years ago to package a retail energy company. It begtins with a CIM document that they circulate to a large list of companies that they feel would be interested. the CIM is a brief on the company's various perspectives. Once they have a list of interested parties they bring the two parties together and Waterous provides the potential

[Nawaralsaadi]

db, thank you for the insight on the inner workings of Scotia Waterous; I have spoken to the bankers handling the deal on three occasions and I was impressed by them. Scotia Waterous was the top O&G deal maker in the US last year. I fully agree with you, the Canadian assets are of no interest to an MLP; this is why when I discussed the transaction with Scotia, they talked about the potential

[dbeaude]

Nawar, I appreciate your research. MLPs like to pay with stock because as you indicated, they have inflated share prices due to their demand for income. They need to keep buying to replace reserves and to continue to fund the cash payments to unit holders. Usually a company's parts are worth more than its whole....this in my opinion is particularly true for a company like EQU with divers

[Nawaralsaadi]

db, I believe we are reaching the end game on Europe. Spain & Italy can't sustain their current bond yields, Greece was a side show; but now the battle is reaching key countries, either the ECB has to intervene massively or Germany needs to drop some of its opposition to some of the proposed solutions: - Allowing the ESM to directly capitalize the banks. - Giving the ESM a banking licence

[dbeaude]

I agree, the debt crisis could have started 5-10 years ago in Europe, but the market makers decided on just after the US financial meltdown as the sovereign balance sheets became the focus. All of a sudden it has become a crisis but the conditions have there for a long time. Confidence needs to be restored and to your point....pick your bazooka and fire it soon please. Bought more EQU