May 12, 2015 | Houston, TX Oil & Gas M&A Seminar: Identifying Opportunities in a Volatile Market . Oil & Gas M&A Seminar Identifying Opportunities in a Volatile Market May 12, 2015 | Houston, TX The New World in A&D: Today’s Market Michael P. Darden, Partner, Latham & Watkins Stephen C. Szalkowski, Associate, Latham & Watkins . The New World in A&D: Today’s Market • Upstream Transactions versus Midstream Transactions • Asset Transactions versus Equity Transactions • Undeveloped Acreage versus Producing Assets Oil & Gas M&A Seminar: Identifying Opportunities in a Volatile Market 3 . Upstream Transactions versus Midstream Transactions • What is the trend, and what is causing it? • Success of upstream operations (shale plays) • Leads to a lack of infrastructure/takeaway capacity • Separate midstream businesses as a path to monetization • Midstream business – the perfect MLP model • Midstream component, as part of upstream deal Oil & Gas M&A Seminar: Identifying Opportunities in a Volatile Market 4 . Asset Transactions versus Equity Transactions • Still weighted toward asset deals on upstream • Tendency toward equity deals on midstream • Different trend when private equity involved? • Joint ownership of midstream assets through entity • Structuring considerations (preferential rights and consents) Oil & Gas M&A Seminar: Identifying Opportunities in a Volatile Market 5 . Undeveloped Acreage versus Producing Assets • Trend toward valuation of PDP only (and maybe PDNP) • Less value attributed to PUDS (or other undeveloped acreage) • More deals with a greater percentage of producing assets • Back to the norm? • Onshore unconventional vs. onshore conventional vs. offshore Oil & Gas M&A Seminar: Identifying Opportunities in a Volatile Market 6 .