“That which we obtain too easily, we esteem too lightly. It is dearness only which gives everything its value.” Thomas Paine
Over the past few years, the competitive market for reserve acquisitions created very limited opportunities to consummate “checkbook deals”. The acquisition and development sector is experiencing fewer viable reserve packages. In addition, every company with an A&D group is scouring the market for various sized transactions to complement their existing reserve base. As a general rule, companies divesting reserve packages are doing so as an exit strategy from a specific business unit or basin and utilizing investment banking firms, advisory services and marketing companies. This creates an environment whereby the seller has “perfect knowledge” of all of the financial aspects of its proposed transaction. The buyer is simply bidding against the value established by the seller’s advisor. The upside heretofore has been, in reality, subject to commodity product price fluctuations.
“Remember, that capital is of the prolific, generating nature. Capital can beget capital, and its offspring can beget more, and so on.” Benjamin Franklin
While reserve acquisitions are generally a low-overhead business strategy to execute, our evaluation of the current market leads us to believe that, despite a significant budget for reserve acquisitions, there are a number of opportunities that bode well for Oceanis and its partners ~ access to situations that allows for the ability to supplant existent capital constraints with development dollars directed toward substantially viable and successful operators that have truly sustainable developmental opportunities ~ which will provide Oceanis and its partners an exceptional return on invested capital.
We will, however, utilize our extensive contacts in the industry in an effort to recognize, evaluate and close on available properties prior to “public viewing”. Additionally, Oceanis will make small, strategic acquisition in the immediate area of an exploration or exploitation play identified by us or through a joint venture with an industry partner.
With Oceanis’ clear recognition and interpretation of current market characteristics: the significant tightening of available credit; the mass exodus of hedge funds and other investors from the market; demonstrable internal cash flow constraints; coincidental commodity, capital and financial market realities; the E&P peer group economic modeling failures; and the advent of modifications in the global energy and commodities markets (both real and perceived) ~ will result in Oceanis’ achievement of appreciable commercial success.