randall & dewey a division of jefferies & company, inc. member, sipc ipaa/coga – denver...
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Randall & DeweyA division of Jefferies & Company, Inc.
Member, SIPC
IPAA/COGA – Denver Private Capital Conference
David C. RockecharlieManaging Director
August 10, 2006
CONFIDENTIAL
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Overview of Randall & Dewey, a division Overview of Randall & Dewey, a division of Jefferies of Jefferies
Jefferies was voted 2005 middle market investment bank of the Jefferies was voted 2005 middle market investment bank of the yearyear
Focused on private companies and middle market public Focused on private companies and middle market public companiescompanies
2,000 employees across 25 offices worldwide2,000 employees across 25 offices worldwide
Randall & Dewey is the oil and gas group of JefferiesRandall & Dewey is the oil and gas group of Jefferies Largest E&P team on Wall Street - 125 global E&P Largest E&P team on Wall Street - 125 global E&P
professionalsprofessionals
Randall & Dewey serves the entire E&P marketRandall & Dewey serves the entire E&P market Work with E&P startups Work with E&P startups the Majorsthe Majors $15 billion in M&A transactions$15 billion in M&A transactions $5 billion in public and private financing transactions$5 billion in public and private financing transactions Deal sizes from $2 million to $2+ billionDeal sizes from $2 million to $2+ billion Advisor on nearly 50% of U.S. MA&D transaction volumeAdvisor on nearly 50% of U.S. MA&D transaction volume
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Selected R&D TransactionsSelected R&D Transactions
M&A
Capital Markets January 2006
Sale of Royalty Interests in Brea Olinda Field
$49,750,000Financial Advisor to the Seller
December 2005
$250,000,000Senior Secured Notes Offering
Sole Placement Agent
November 2005
$81,250,000
Follow-on OfferingCo-Manager
December 2005
$100,500,000
Public Equity OfferingSole Book-Running Manager
Convertible NotesSole Manager
$50,000,000
July 2006 July 2006
$276,250,000
Follow-on Equity OfferingJoint Bookrunner
W T F F S H O R EI N C O R P R A T E DO
May 2006
Financial Advisor to the Seller
has been acquired by
$750,000,000
June 2006
Financial Advisor to the Seller
$1,246,000,000
has been acquired by
December 2005
$2,450,000,000Financial Advisor to the Seller
has been acquired by
Pending
Financial Advisor to the Seller
$2,200,000,000
has been acquired by
November 2005
Transaction Advisor to the Seller
Sale of Denver Julesburg Basin Assets acquired by
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State of the Energy Market…State of the Energy Market…
Newton Discovers the Theory of Commodity Prices
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Preliminary Term SheetPreliminary Term Sheet
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An Abundance of Capital SourcesAn Abundance of Capital Sources
Commercial BanksCommercial Banks
Mezz FundsMezz Funds
Private EquityPrivate Equity
Venture CapitalVenture Capital
Royalty FundsRoyalty Funds
Hedge FundsHedge Funds
Insurance FundsInsurance Funds
MunicipalsMunicipals
End-user IndustrialsEnd-user Industrials
UtilitiesUtilities
MLPs/LLCsMLPs/LLCs
Pension FundsPension Funds
High Net-Worth IndividualsHigh Net-Worth Individuals
Large-Cap Industry Players Large-Cap Industry Players
(CVX, RD, CHK, etc.)(CVX, RD, CHK, etc.)
Traditional Public Markets Traditional Public Markets
(NYSE, NASDAQ, AMEX, LSE)(NYSE, NASDAQ, AMEX, LSE)
Emerging Public Markets Emerging Public Markets
(AIM, TSE, Dubai)(AIM, TSE, Dubai)
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Traditional Corporate Finance Traditional Corporate Finance Alternatives Were Easily Classified…Alternatives Were Easily Classified…
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The Increasing Gray Area…Create Order The Increasing Gray Area…Create Order From ChaosFrom Chaos
VPP High Yield ConvertibleDebt
Bank Debt MezzanineDebt
Public Equity Private EquityRoyalty Sale
Proved Reserves (Engineering Risk) 3P Reserves (Geological Risk)Risk Profile
Cost of Capital
Low High
Lines are starting to blur as financial instruments are being structured in unique ways to take on new characteristics
Warrants coverage
Participating interest rates (pegged to commodity prices, dividends, etc.)
Convertible Features
Increasing Risk Profile
Pref. Rights
Ultra Short/Long Maturities
Security
Covenants
Amortization / Bullet / Zero
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The Elegant Solution is not Always The Elegant Solution is not Always ApparentApparent
Equity dilution vs. operational control?
Leverage against my assets?
Cost of Capital?
Gives me credit for today’s commodity prices?Values my upside potential?Structural Flexibility?
Einstein develops his theory of negativity.
Case Studies:Case Studies:Solving the PuzzleSolving the Puzzle
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Blacksand EnergyBlacksand Energy
In early 2005, Blacksand Energy undertook a recapitalization of In early 2005, Blacksand Energy undertook a recapitalization of the Companythe Company
Key considerations for Blacksand’s management team:Key considerations for Blacksand’s management team: Provide growth platformProvide growth platform Align asset characteristics with new capital structureAlign asset characteristics with new capital structure Increase equity ownershipIncrease equity ownership Maintain operating controlMaintain operating control
Explored range of alternatives to find the right solutionExplored range of alternatives to find the right solution ResultsResults
Management nearly doubled equity stake in companyManagement nearly doubled equity stake in company Secured commitments of $250MM in debt and $50MM in Secured commitments of $250MM in debt and $50MM in
equity from strong partnersequity from strong partners Executed on acquisition and divestiture planExecuted on acquisition and divestiture plan Sold Company in ideal commodity price/capital markets Sold Company in ideal commodity price/capital markets
environmentenvironment
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Blacksand Energy: Solving the PuzzleBlacksand Energy: Solving the Puzzle
Recapitalization Buyout PartnerBank DebtSub DebtPrivate EquityHedge
Monetization Royalty Sale 1Royalty Sale 2
Growth Offset Acquisition
Exit = $ Sale to recent IPO Company
Acquisition of AssetsManagement EquityPrivate Equity
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Other Creative Financing Case StudiesOther Creative Financing Case Studies
High Yield Debtwith Warrants
Recap + Development Capital
Long-Term VPP Acquisition of BP San Juan Assets
Leveraged Recap/VPP
Recap + Acquisition andDevelopment Capital
Convertible DebtDevelopment Capital
Bank Debt Warrant Exercise
Financing S. Louisiana AssetPurchase
High Yield/PrivateEquity/Hedges
Structured acquisition ofBelden & Blake
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