(Stock Swap Deal with a Fixed Exchange Ratio.)
PDC – SRC Energy Financial Model is a financial model of a North American Oil & Gas Company merger with another North American Oil & Gas Company that is classified as a reorganization under section 368 (a) of Internal Revenue Code. The deal is a stock swap with a fixed exchange ratio. The model is ideal for investment banking, equity research, oil & gas finance professionals and valuation and transaction experts. The model includes the following features:
- A 3-statement financial model of an Oil & Gas, E&P (exploration and production) company including: comprehensive production and revenue schedules, cost schedule, depreciation and depletion schedule, working capital schedule, simplified tax schedule, debt and interest schedule, shareholder’s equity schedule, covenants and credit statistics spanning across earnings quality, cash flow quality, operating efficiency, balance sheet quality and valuation risk metrics, income statement, cash flow statement and balance sheet for a six year forecast period.
- Historical financial statements for a period of four years on a semi annual basis for both the Target and the Acquirer, company specific operating metrics such as operating netback, cashflow netback, reserve ratios, production replacement ratio, reserve cost ratio and depletion rate among others as well as the description of sector specific metrics in the notes and comments, covenants and credit statistics including earnings quality, cash flow quality, operating efficiency, balance sheet quality and valuation risk metrics.
- A comprehensive description of the Oil & Gas industry metrics and definition and methodologies in the notes and comments of MS Excel cells such as explanation of operating netback, cashflow netback, reserve ratios, production replacement ratio, reserve cost ratio and various O&G company valuation methods such as net asset valuation (NAV).
- Mergers and Acquisition model and accretion and dilution analysis of the stock swap deal with a fixed exchange ratio to PDC Energy shareholders as of August 23, 2019, three days prior to the deal announcement.
- Sources and uses of funds model, purchase price allocation and calculation of negative goodwill in the transaction given the deal tearsheet information and its reflection as an extraordinary gain recorded on the combined company income statement and balance sheet.
- Recapitalized pro forma balance sheet of the combined company.
- Impact of the Target acquisition on the Acquirer as of Aug 23, 2019 and the value creation opportunities for the Target and the Acquirer given the most appropriate range of forward price to earnings ratios as of 2019 and 2020.
- Valuation of the combined, Oil & Gas E&P company based on intrinsic value approach.
- Valuation of the combined company, Oil & Gas E&P company based on relative valuation and comparable analysis of peer group companies given the forward EV/EBITDA multiples.
- Valuation of the combined, Oil & Gas E&P company based on Net Asset Value (NAV) approach.
- Stand alone valuation of the Target company based on relative valuation and comparable analysis of peer group companies given the forward EV/EBITDA multiples.
- Stand alone valuation of the Acquirer, Oil & Gas E&P company based on relative valuation and comparable analysis of peer group companies given the forward EV/EBITDA multiples.
- Calculation of basic and diluted shares outstanding for the Acquirer and Target.
- Sensitivity analysis of the intrinsic valuation of the combined company with respect to weighted average cost of capital and term year growth rate.
- Scenario analysis for Base, Best and Worst Case inflation and realized prices for crude oil, natural gas and NGL and the resultant three statement financial model and implied valuations.
- Quantification of risk measures for purposes of valuation including beta calculation, cost of equity and cost of capital.
- A summary dashboard of combined company financial report and credit statistics, market data, transaction and deal data, implied forward price to earning multiples, sources and uses of funds, accretion and dilution analysis, and value creation opportunities for both parties, key financial metrics, annual figures, comps, valuations for Target and Acquirer and the combined company & statistics.
- The tabs of the models are: Cover, Summary, Assumptions, Sources & Uses, Historicals, M&A Model, Pro Forma Valuation Model, NAV, Other, and Notes.
- A report of the transaction and the financial model describing different steps and segments of the model and the transaction terms and company valuation as of August 23, 2019 along with the print ready format of the model is included with the package.
PDC & SRC Energy Financial Model
- This financial model is a circular, 3-statement model along with a comprehensive M&A model with many other features explained in the product description. Please ensure prior to opening the excel sheet, iterative calculations within the excel workbook environment has been enabled under: File/Options/Formulas/Enable iterative calculations.
- Set the Calculation options under File/Options/Formulas to ‘Automatic except data tables’. In case of the existence of data tables in the models, press F9 to refresh and update the table calculations.
- The workbook contains a Macro in the form of the product Disclaimer which should be accepted by the user; hence, please enable macros in the workbook. The financial model itself contains no macros.
- Please ensure the above steps are implemented prior to opening the excel sheet.
- If at any point #Value! appears in the Model and the results, toggle the circularity switch on the General Assumptions tab to ON and then OFF to address the problem. This switch sets all interest expenses to zero when turned ON.
- If any changes are applied to the assumption inputs in the model, toggle through the Scenario Switch on the General Assumptions tab to Base, Best and Worst Case so that the Summary tab results are updated.
- All blue font in the model are hardcoded inputs, black font is calculation, red font is the references to the blue inputs on the Assumptions tabs, and any orange cells are values sourced from Refinitiv.