If I know everything there is to know about O&G, what do I know?

Say I walk into an interview at a buy-side firm and tell the interviewer that I know the oil and gas industry pretty well. What should I know besides industry news, familiarity with many companies, a stock pitch or two, and obviously how to value companies in the industry?

I'm interested in oil and gas, and I know it about as well as any other industry, but I wouldn't call myself an expert by any stretch. I have a number of interviews coming up in January, so I'd like to spend the next month and a half really nailing down my knowledge on this industry. I have relatives and family friends that work in the industry, so I can get just about any information I want if I know what to ask for.

Comments (24)

Nov 15, 2011

30 years operator experience and a Phd in petroleum geology would at least put you in 50th percentile of those who know "everything there is to know". But that would just cover upstream/E&P.

Knowing a portion of that, plus some midstream knowledge such as detailing the impact of acquiring an MLP with a complex GP/LP structure, what it means for distributable cash flow when in the 50% splits, impact of various drop-downs, etc would get you up to the level of a 1st year analyst.

Best get to reading.

Nov 15, 2011

Nice Cartwright, and so true.

If i want to know the basic, I would learn reserve valuation techniques.

Know decline curves and what they mean. If you have time learn the difference between a decline curve for say the Haynesville versus the Bakken. Then learn the economics and the basics about the rock quality of all of the large shales. It is not really that hard as company presentations lay this shit out.

Here is a case study for you:

The rock in the Niobrara is hit or miss and the many of the hits come off hard. But they are still wet with similar economics to some of the stuff HK is doing in the Haynesville. Definitely not like Bakken wells, but maybe a good relative comp is some of the stuff Nobel is up to in CA.

Poke as many holes as you can in that (they are there).

Hard, wet, poke. Really, ER is not this sexy.

Nov 15, 2011

Definitely know the more popular emerging plays (Mercellus, Bakken, Cardium, Montney), the current price deck (futures), the role of each "stage" in getting from the ground to your tank (Upstream, Midstream, Downstream), differentials (WTI/Brent, Heavy/Light, Synthetic/Light), some of the recent technologies in the unconventional space (fireflood, fracking, waterflood, SAGD), netbacks, impact/value of hedging production, oil/gas mix, big players, history of the oil space in the US/Canada, global macro for oil (important for large integrated, less so for PE probably), pipelines/capacity, blends, API, sulfur/metal content in different plays, decline rates.

In terms of some recent hot topics in the area: Keystone XL, oversupply at Cushing, decline rates of unconventional wells and how that's impacting the massive spike in necessary "sustaining" CAPEX.

I could go on for a while... and all of this might still leave you under-informed for a first year analyst.

Best of luck (not being sarcastic)!

Nov 15, 2011

If you can, get the DB Oil & Gas Primer from September 2010 and the CS from September 2011.

The DB one is HUGE (~600 pages) and the CS one is a little more manageable at ~200.

Also brush up on some recent transactions (lots of Bakken and some Utica):

KOG - http://kodiakog.investorroom.com/index.php?s=43&it... BEXP - http://www.statoil.com/en/NewsAndMedia/News/2011/P...
CHK - http://www.chk.com/News/Articles/Pages/1626065.aspx HK - http://www.petrohawk.com/About-Petrohawk/Press-Rel...
Kinder Morgan - http://phx.corporate-ir.net/phoenix.zhtml?c=119776...

Nov 16, 2011

Another thing to look at is all of the recent integrated separations Conoco, Marathon, etc.

Conoco - http://www.conocophillips.com/EN/newsroom/news_rel...
Marathon - http://www.marathonoil.com/News/Press_Releases/Pre...

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Nov 16, 2011

search DB oil and gas on google. The primer is on the first page. 460 pages of awesomeness

Nov 16, 2011
Nov 16, 2011

Thanks for mentioning that Credit Suisse report. Any recommended ways of keeping track of this stuff via Bloomberg? Still learning :)

Nov 16, 2011

Bloomberg won't be very helpful for O&G in general. You'll be able to get spot/futures price decks from Bloomberg, and obviously catch up on any news regarding public companies (which in PE you obviously wouldn't be dealing with). Outside of that, company presentations (powerpoints) are very useful for getting a play-by-play synopsis of their operations. Financials and Press Releases are also solid for info.

Nov 16, 2011

Thanks. I know that was a super vague and clueless sounding question but I'm interning at a fixed income fund and have no idea how to use Bloomberg for anything beyond that. I've been trying to look through research reports but there's just so much garbage to filter through. Are there any analysts in particular that you follow or is that kind of a waste of time? Not sure if you're sell or buy-side, sorry.

Nov 18, 2011

whatwhat, I usually just skim through the O&G daily that JPM and CS write so if you have acces to JPM research I suggest you do the same.

I also just started reading Oil 101 which is fantastic because Its a really easy read imo and it helps you so much in understanding some of these research reports

Nov 18, 2011

For an analyst worth following, I'd suggest mine, of course. That said, I'm a little biased, and our research isn't available for free, unfortunately.

Most of the large banks have decent coverage. Some notable contenders in Canada include RBC and BMO for large caps. FirstEnergy and Raymond James are good for small-caps.

Unfortunately, I'm not as aware of US analysts.

Nov 20, 2011

I'm also in energy ER at one of the shops Sovjet mentioned in Canada. I would check out the CAPP 2011-2025 Crude Oil Forecast, Markets & Pipeline Report. It is an easy read and is useful for understanding pipeline transportation in North America.

For the US, try to get your hands on Tudor, Pickering and Holt reports. Otherwise, I like the stuff from Barclays and CS.

Nov 21, 2011

You guys are awesome.

Nov 23, 2011

See if you can get someone to forward you Tudor Pickering Holt's morning note. They are currently the gold standard for energy research, the only thing that they don't really cover is renewable. They will provide you with a rundown each morning of all of the tickers with interesting updates. They do a rig count on Mondays and a breakdown of current industry and GeoPol events by region.

Nov 23, 2011

I thought the kings of oil research were Wood Mackenzie

Nov 25, 2011

Wood Mac does Macro work, if you want anything equity related TPH is the place to go. Simmons has very solid o&g services coverage.

Nov 25, 2011

Solid thread. Anyone have the link to the CS primer?

Edit: http://www.scribd.com/mobile/documents/66375477/do...

Jan 23, 2013

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Mar 15, 2012

Hi guys,

I am a graduate at a ratings agency. I have struck up a good relationship with the Oil&Gas guys and one of the main analysts told me he wants me to join the team after my first year of training is over. I like the team and the industry really interests me and I could see myself being motivated to work hard in this group. My only issue is that I don't have an engineering background and I'm not a geologist. I wonder if this will always hinder me going forward? Will I be able to become a respected analyst or will I always be at a disadvantage?

Thoughts from analysts in the same situation would be much appreciated.

Thanks

Mar 15, 2012

How do O&G teams see having connections in the industry? I know a lot of people in the oilfield services space i could leverage....

    • 1
Mar 25, 2012

@Unforseen, It would largely depend on if you end up covering the oil field services space and what types of roles these people are in that you know. I currently work for a CAD bank and connections and "on the ground intelligence" is definitely helpful in building the broader picture etc. Based of just your connections that wouldn't make you competitive for the job but it would definitely add talking points to an interview if you had one

May 27, 2012
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