Asset Valuation of Sable Permian Resources

Asset Valuation of Sable Permian Resources

On June 16, 2020, Sable Permian Resources, LLC filed for Chapter 11 in US Bankruptcy Court in Houston, Texas. According to reports, the company said it has secured $150 million in debtor-in-possession financing to fund its operations during the restructuring and working with advisers on a range of alternatives.

LandGate estimates Sable’s Permian Resources Midland Basin assets to be valued at $875 million. Detailed economic analysis and a full reserve report will be provided in this blog based on publicly available data and LandGate’s automated PowerVal software.

Learn More

According to the Haynes and Boone Bankruptcy Monitor, Sable Permian Resources had $574,910,140 in secured financing and $808,780,000 in unsecured, bringing the company’s total debt to $1,383,690,140. Given such a high debt burden, it was clear that even the prolific Midland Basin wasn’t enough to save the company in the current economic climate.

Figure 1. Sable Permian Resources Acreage and Well Map (sources: sableres.com; LandGate)
Figure 1. Sable Permian Resources Acreage and Well Map (sources: sableres.com; LandGate)

Asset Overview

Sable Permian Resources operates 663 producing wells in Reagan, Irion, and Crockett County, TX. As of April 2020, the wells were producing 19,827 bbl/d oil and 233.0 MMcf/d gas at a gross level. LandGate estimates Sable Permian Resources August 2020 net cash flow to be $20.4 million per month.

Forecasted 1P net reserves totaled 68.8 MMbl Oil, 521.8 BCF, and 57.4 MMbbl NGLs.

Figure 2. Sable Permian Resources Gross Production Summary
Figure 2. Sable Permian Resources Gross Production Summary

LandGate provides a geological snapshot of the formations being produced by Sable Permian Resources and groups the locations by well type. See Figure 3.

Figure 3. Sable Permian Resources Geological Strat Column
Figure 3. Sable Permian Resources Geological Strat Column

LandGate included PDP and PUD reserves in the reserve report. Based on Sable Permian Resources current development and LandGate analysis, LandGate added 30 Wolfcamp PUD drilling locations and 10 Spraberry drilling locations that have not been permitted (upsides). The company reports to operate 127,600 net acres.

LandGate used the following type curve for the Wolfcamp PUD locations.

Figure 4. Sable Permian Resources Wolfcamp Type Curve Gross Forecast.
Figure 4. Sable Permian Resources Wolfcamp Type Curve Gross Forecast.

Type Curve Parameters

Figure 5. Undeveloped Well Location Mapping in PowerVal
Figure 5. Undeveloped Well Location Mapping in PowerVal

IP: 1,000 BOPD & 550 Mcf/d

EUR: 980.5 Mbbl oil, 1.4 BCF, 158.9 Mbbls NGLs

LandGate’s PowerVal software allows users to draw additional undeveloped well locations to map upside potential.

Economic Results

Figure 6 below shows the estimated oil and gas reserves for PDP and PUD, as well as future net revenue to Sable Permian Resources as of 08/01/2020 using the 7/14/2020 NYMEX futures.

Figure 6. Reserve Report Summary.
Figure 6. Reserve Report Summary.

Market Valuation

Figure 7 below demonstrates the risk factors applied to PDP and PUD in order to determine a market value.

Figure 7. Valuation Summary.
Figure 7. Valuation Summary.
Figure 8. Sable Permian Resources Net Cash Flow Summary and Net Production.
Figure 8. Sable Permian Resources Net Cash Flow Summary and Net Production.
Figure 9. Sable Permian Resources Net Reserve Commutative Forecast.
Figure 9. Sable Permian Resources Net Reserve Commutative Forecast.

Ownership: 90% WI and 67.5% NRI

Download the full reserve report and supporting files for Sable Permian Resources.

Conclusion

Figure 9.Price Deck (NYMEX WTI CL 07-14-20; Henry Hub NG 07-14-20)
Figure 9.Price Deck (NYMEX WTI CL 07-14-20; Henry Hub NG 07-14-20)

Sable Permian Resources retained Hunton Andrews Kurth as its restructuring adviser. Should the company’s assets be put on the market, the prolific nature of the Midland Basin makes the asset an attractive acquisition target.

LandGate is a data intelligence platform and marketplace for land resources. LandGate provides valuation research for its clients as well as software tools for buyers of oil and gas and other property rights.

Learn more about PowerVal, the only fully automated oil & gas data, economics and deals platform.

Contact Us

Website Terms and Conditions Apply. Nothing in this Blog or LandGate Website constitutes legal or investment advice. LandGate Website and Blog contain data and information obtained from public data, third parties, and internal company analysis of such data and information. LandGate has not independently verified the data and information obtained from these sources. All market data contained within LandGate website should be considered as a reference only and not as validation against. Forward-looking information obtained from these sources is subject to the same qualifications noted above. The contents of the site may contain forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about the oil and gas industry, the economy, or its investments. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Furthermore, LandGate undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Follow us on social media:

Leave a Reply

Your email address will not be published. Required fields are marked *