Stay Connected

Energy

Print

Conway MacKenzie works with companies throughout the energy industry to overcome some of the biggest challenges the sector has faced in decades.

The firm’s professionals are turnaround and restructuring experts with significant energy industry experience and backgrounds in distressed investing, corporate finance transactions, strategic planning and forecasting, accounting, auditing and bankruptcy law.

We help clients overcome the obstacles, and take advantage of the opportunities, that today’s volatile energy market presents. Our services range from assisting energy companies to restructure operations and finances (both in- and out-of-court), helping them to find new sources of capital, and working with them to maximize value while buying and selling assets. We also represent secured lenders who have extended credit to distressed energy companies, as well as unsecured creditors committees and investors with equity positions.

We often serve in the roles of Chief Executive Officer, Chief Financial Officer and Chief Restructuring Officer to under-performing energy businesses, leading turnaround efforts that improve operations, cash flows and balance sheets.

Our experience in the industry and our approach to helping clients is unique:

  • We have successfully worked on more than 50 energy industry-focused turnaround, restructuring, and corporate finance matters since 2010, including serving in more than 15 interim C-level officer roles.
  • We serve a diverse client base that includes public and private companies, energy banks, mezzanine lenders, private equity and hedge funds.
  • We have extensive relationships within the distressed lending and investing arena, which offer creative financing options where none might otherwise appear to exist.
  • We apply a proactive, hands-on problem solving style with experienced, senior team members actively involved on deal teams.

Based in Houston and Dallas, Conway MacKenzie’s Energy Advisory Services Team is strategically located and readily available to the industry’s businesses, investors, secured lenders and other constituents to advise or manage through financial and operational challenges. The Energy Advisory Services Team is also able to tap into Conway MacKenzie’s additional national and international multi-disciplinary capabilities.

Oil & Gas Industry Overview

Oil & Gas Industry Overview

Our team, our services, and our approach to problem solving are all geared toward helping clients address the unique challenges presented by today’s market.

The oil & gas industry is being hit hard by lower crude oil prices, which is sending shockwaves through the entire sector. A drastic price decrease followed by volatility in WTI and ICE Brent oil prices occurred in late 2014 and early 2015. The factors contributing to these price drops and volatility are varied and complex, and include:

  • Increases in global oil supply, a strong U.S. dollar and economic weakness in Europe and Asia have all contributed to oil price declines, taking energy industry equity prices down with them.
  • Oil has struggled with a supply glut from the U.S. shale boom and OPEC’s unwillingness or inability to moderate production in the Middle East.
  • Natural gas production in the U.S., particularly from shale, has materially increased over the last seven years.

Since the decline, crude prices have recovered above $60/barrel while natural gas has remained near $3/mmbtu. Cash flow and capital expenditures have improved across the industry, however increasing hydrocarbon prices have not benefited all oil and gas participants. Rig counts remain below historical levels and services prices outside the Permian Basin have not recovered. While Permian Basin activity continues to drive production and profits, many other basins continue to face challenges for both exploration & production and oilfield service companies.

Change is constant in the energy industry, and market participants must continually adapt to survive and thrive. Through our work, involvement in relevant associations, thought leadership, and past professional experience, Conway MacKenzie remains at the forefront of the energy industry and stands ready to assist clients with the challenges and opportunities they face.

Power Generation Industry Overview

Power Generation Industry Overview

Conway MacKenzie’s professionals have executed for our clients in the power generation sector of the energy industry since Enron filed for bankruptcy in 2001. We have worked for clients ranging from Mirant Corporation to smaller individual assets, in markets throughout the United States and Mexico.

Recently, a dynamic shift has taken place within the power generation industry driven by regulatory and technological changes.

  • Technology advancements in both shale and power production have led to an abundant, relatively inexpensive natural gas and oil supply, making the U.S. one of the most cost-competitive regions for energy-intensive industries in the world.
  • The abundance of natural gas in the U.S. has led to a structural oversupply of North American natural gas which is projected to keep prices near $3/mmbtu over the next several years, contributing to a structural shift in baseload assets using natural gas, from coal and nuclear fuels.

For many years coal and nuclear assets served as the key to America’s power generation needs, serving as the baseload capacity for homes and industry powering the U.S. economy. With the significant reduction in the natural gas price, gas-fired assets have become more competitive, taking baseload capacity from nuclear and coal generation. Many independent power producers have found themselves with over-levered portfolios due to the falling prices given the changing landscape.

Changes within the power generation industry are constant. Conway MacKenzie’s professionals have been intimately involved, understanding the underlying shifts in power markets throughout the country caused by economic, technological and regulatory changes and working with all types of stakeholders.

Metals & Mining Industry: Coal Sector Overview

Metals & Mining Industry: Coal Sector Overview

In the broader metals and mining industry, many operators are reaping the benefits of cost-savings initiatives, technological advancements, and recovering commodity prices, however liquidity concerns still loom for many in the coal mining sector. Cost-savings initiatives may not be enough to offset the impact of market-wide volume and price declines. Thus, while market leaders look to capitalize on technological advancements, others still need to stabilize the balance sheet to enable future growth.

Volume and price declines and a shift to natural gas negatively affect the coal mining sector

Although we have seen a wave of bankruptcies over the last two to three years, the coal mining sector is not out of the woods yet. In addition to the market-wide price and volume declines, changes in the power generation market are another major contributor. As the price differential between natural gas and coal has tightened—and regulatory pressure on coal-fired assets has increased—domestic power generation capacity has continued to shift from coal to natural gas. As a result of this shift, a significant number of coal-fired power plants have been retired, driving down sales volumes for mine-mouth operators which previously supplied these plants.

Employment in the sector declining along with production

From 2001-2011, the coal industry experienced an average employment growth of roughly 2% per year. Since 2011, employment has declined across U.S. regions, with the Appalachian region experiencing the largest reduction—losing over 31,000 employees.

Our professionals at the forefront of the industry

As with other commodity-driven industries, change is constant in the mining industry and market participants must continually adapt to survive. The Conway MacKenzie team remains at the forefront of the industry, and we are eager to assist you with the challenges you may face and help you capitalize on the opportunities that lie ahead.

View Select Case Studies
Exploring Options For Success

The Engagement

Conway MacKenzie was engaged to assist a private equity owned natural gas focused exploration and production company. Various factors reduced the company’s revenue which, together with increased capital costs associated with its drilling program, resulted in a liquidity crunch for the company.

Our Role

At the time of our engagement, the company’s finance department was dealing with a lack of skilled resources and was faced with the need to raise capital, manage cash liquidity, forecast multiple operating scenarios and complete an already delayed annual audit.

Conway MacKenzie’s highly experienced industry professionals provided inflection with the following value-added services: Chief Accounting Officer and financial analyst, key process management, diligence coordination, weekly cash forecasting and management, scenario modeling, business plan development and budgeting, and accounting/finance process improvements.

The Result

  • Executed amended and restated credit facility which added two more banks to the group, increased the borrowing base by $60 million and amended certain covenants
  • Raised $225 million of preferred equity from an energy-focused investment firm
  • Developed 2015 budget and operating plan in an uncertain natural gas price environment
  • Developed 3-year forecast model which allowed for planning under multiple different price, production and operating scenarios
  • Developed detailed 13-week cash flow model which greatly improved visibility to liquidity and allowed for improved cash management
  • Completed the annual audit under tight deadlines and issued audited financial statements to the banks in time to close amended and restated credit facility
  • Implemented enhanced budget, forecasting, financial and operational reporting and accounts payable processes, while significantly improving communication between the finance, accounting, operations and land functions
Read More

Select Restructuring Advisory Experience