Recent Trends in E&P Shareholder Activism

03/08/2019

What is Shareholder Activism?

Activist shareholders target publicly-traded companies and look to bring about organizational change through their campaigns. Activist campaigns have steadily increased in the last decade and in 2018 alone, more than 200 companies were targeted by campaigns according to Activistmonitor data. The energy industry has not been spared by the rising trend, and 2018 saw an increased number of activists targeting energy companies of all sizes varying from large and mid-cap to small-cap.

What Demands are Activist Shareholders Targeting Energy Companies Making?

Specific activist demands vary in each campaign, but common requests we saw in 2018 campaigns against E&P companies include: 

  • Requesting strategic alternatives, including mergers and acquisitions; spin-offs and divestitures of oil and gas assets
  • Seeking board member appointments and representation
  • Capital allocation or structural changes
  • Management changes
  • Cost reductions and operational improvements

What Can E&P Companies do to Prepare?

It is crucial for all public energy companies to be on the look-out and prepare for an activist campaign so that an effective response to a campaign can be delivered if initiated. Board and management teams are advised to actively monitor the shareholder base, have an ongoing shareholder outreach program and continuously evaluate the company’s performance relative to its peers. It is beneficial to anticipate how an activist might criticize the company so the company can develop a shareholder engagement plan tailored to the issues the company faces.

Recent Campaigns

The following table shows select activist campaigns in 2018 targeting energy companies and a summary of the related demands.

Target Activist Date Announced Demands
Antero Resources Corporation
SailingStone Capital Partners
January 2018
Strategic Alternatives
Carrizo Oil & Gas KEMC Fund April 2018
Bolt-On/Divestiture/Spin-Off
Crescent Point Energy Corp.
Cation Capital
April 2018 Board Member Appointment

Governance Changes

Management Changes
EQT Corporation
Toby and Derek Rice December 2018
Board Member Appointment

Cost Reductions/Operational Improvements

Management Changes
Exxon Mobil Corporation
New York State Common Retirement Fund
December 2018
Environmental/Social Changes
Halcon Resources Corporation
Fir Tree Partners L.P.
October 2018
Bolt-On/Divestiture/Spin-off Capital

Allocation/Structural Changes

Share Buyback/Dividend/Return of Capital
MEG Energy Corporation
Highfields Capital Management LP
July 2018 Capital Allocation/Structural Changes

Cost Reductions/Operational Improvements
Obsidian Energy
FrontFour Capital
January 2018 Board Member Appointment

Bold-On/Divestiture/Spin-off

Capital Allocation/Structural Changes

Cost Reductions/Operational Improvements

Share Buyback/Dividend/Return of Capital
Penn Virginia Corporation Mangrove Partners
October 2018
Oppose Acquisition/Merger Agreement
Range Resources Corporation
Stelliam Investment Management LP
May 2018
Governance Changes

Management Changes
Resolute Energy Corporation
Lion Point Capital
October 2018
Governance Changes

Strategic Alternatives
Kimmeridge Energy Management GP, LLC
October 2018
Cost Reduction/Operational Improvements
Monarch Alternative Capital LP
January 2018
Board Member Appointment

Governance Changes

Strategic Alternatives
VR Global Partners
February 2018
Management Changes

Strategic Alternative
Ring Energy, Inc.
Cannell Capital
October 2018
Share Buyback/Dividend/Return of Capital
SandRidge Energy, Inc.
Carl Icahn (Private Investor)
January 2018
Board Member Appointment

Governance Changes

Management Changes

Strategic Alternatives
Source: Activistmonitor

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