Energy Groups

Credit Suisse has a solid energy group... best on the street...

CS best energy group on the street, how do you figure? I know they're certainly considered top 5 in terms of deal flow (recently advised TXU, etc.), but best on the street hands down? Dubious.

Entergy or TXU are good

Lehman has a strong energy group

If you're talking oil and gas in Houston, CS and Lehman are tops, followed closely by UBS. All others follow.

How is Energy at JPM NY?

Lehman is hands down the best (I dont work at LB). At this point, UBS and CS are probably tied for second best.

GS and MS still get decent deal flow from their names though.

In Houston: Lehman/CS UBS JPM/GS Others... This is from an ED who works at one of those in Houston. One a sidenote, CS in Houston has some of the cockiest, unfriendly people I have met... And GS bankers admitted that they actually outsource about 30-40% of their Oil&Gas deals to New York.

if it's an ED, the guy must work at UBS since none of the other banks that level

For the guys that think the people at CS are cocky, did you interview there, work there, or work in energy in Houston? Just wondering. Also, whats the cultures like at Lehman and UBS for their energy groups?

How about from banks in Calgary,AB (Canada)? There has to be some serious energy players trying to get in on the oilsands action.

A friend of mine interned as summer associate at Lehman Houston in 2005. He hated the place so much, he quit banking and decided to switch careers for full-time. He told me the culture in that office is horrible.

A friend of mine who works at Lehman NY told me similar stuff about houston office based on what he heard.

In terms of deal flow, I have heard Lehman and CS are tops.

A friend who is an associate in the Lehman NY energy group said he enjoys their Houston office and plans on transferring there... just another point to consider.

Based on several friends that worked at UBS & Lehman in Houston, I have heard much positive feedback about the culture at each.

Strength in industry: 1- Lehman, 2- CS,UBS

Lehman, JPMorgan Overtake Morgan, Citi on Energy M&A (Update3)

By Dan Lonkevich and Dana Cimilluca

July 10 (Bloomberg) -- Anyone who wants to know the hottest bankers in mergers and acquisitions should look at the energy industry, where Lehman Brothers Holdings Inc. and JPMorgan Chase & Co. are doing more business than anyone, including traditional leaders Morgan Stanley and Citigroup Inc.

Oil, natural gas, coal and electric companies account for $330 billion, or 18 percent, of takeovers announced in 2006, making energy one of the most lucrative industries in a record year for M&A, data compiled by Bloomberg show. The soaring oil and electricity prices that have consumers and politicians grumbling are making Wall Street even richer as investment banks reap about $1.65 billion in fees, compared with $2.55 billion for all of 2005.

Energy specialists such as Lehman's Grant Porter and JPMorgan's Douglas Petno are displacing colleagues who advise telecommunications companies and banks as the top moneymakers in M&A.

We probably have the largest amount of deals that we're working on that we've ever had,'' said Porter, 55, Lehman's global head of natural resources.We see activity across all sectors of the industry.''

How New York-based Lehman and JPMorgan elbowed aside their rivals shows the importance that clients are putting on key bankers as asset values climb.

William Vereker, 39, helped Lehman win a role in the year's biggest energy deal, advising Spain's Endesa SA on a $57 billion takeover bid by Germany's E.ON AG, 11 months after he was hired from Morgan Stanley to run natural-resources banking in Europe.

`Understood the Risks'

ITC Holdings Corp. Chief Financial Officer Edward Rahill said he tapped Lehman for the Novi, Michigan-based company's $867 million purchase in May of Michigan Electric Transmission, based in Ann Arbor, Michigan, because of bankers Joseph Sauvage, 53, and Jeremy McGuire, 34.

They understood the risks or lack of risks and so could put together the financing more quickly,'' Rahill, 53, said.We interviewed a bunch of advisers who we thought didn't get it. Lehman had the advantage.''

Paris-based Suez SA, France's No. 2 utility, hired JPMorgan for its $55.7 billion purchase by Gaz de France because of the bank's experience in energy and long relationship with the company, Chairman and Chief Executive Officer Gerard Mestrallet said in a July 7 interview. Pascal Ravery, 49, a vice chairman of European investment banking, is JPMorgan's top adviser on the Suez transaction.

Asia Deals

JPMorgan's Ivor Orchard, 53, said he wooed Inpex Holdings Inc. executives for two years before the bank won its first takeover assignment from the Tokyo-based company, Japan's largest oil and gas producer, in 2004. Inpex hired JPMorgan again last year for the $3.7 billion purchase of smaller Japanese rival Teikoku Oil Co.

It's important to stay in front of clients,'' said Orchard, a former Royal Dutch Shell Plc executive who runs <span class="keyword_link"><a href="//www.wallstreetoasis.com/company/jpmorgan-chase">JPMorgan</a></span>'s energy group with 41-year-old Petno and Jeremy Wilson, 42.You can only get business if you continue to follow up on ideas.''

To build on its momentum, JPMorgan on June 29 added Jeff Yingling, 46, a utilities banker in Chicago who spent 16 years at Morgan Stanley.

Today, WPS Resources Corp., a Green Bay, Wisconsin-based electricity supplier, agreed to buy Peoples Energy Corp. of Chicago for about $1.52 billion. JPMorgan is advising WPS and Peoples Energy hired Morgan Stanley.

Stock, Debt Sales

Energy producers and utilities are sitting on a cash stockpile of more than $80 billion after oil prices tripled in the past four years to more than $70 a barrel. The Morgan Stanley Capital International World Energy Sector Index of 118 stocks rose 17 percent in the past 12 months, exceeding the 3.5 percent gain of the U.S. benchmark Standard & Poor's 500 Index.

Some companies, including Woodlands, Texas-based Anadarko Petroleum Corp., which is buying U.S. oil and gas producers Kerr- McGee Corp. and Western Gas Resources Inc. for a total of almost $24 billion, are putting that cash to use for acquisitions. Others, including Russia's OAO Rosneft, are selling stock to raise more cash.

Energy companies announced $36.9 billion of equity offerings and $75.7 billion of debt sales so far this year, data compiled by Bloomberg show.

Fees Balloon

JPMorgan, the world's No. 2 M&A adviser after New York-based Goldman Sachs Group Inc., may generate $362 million of revenue from the $144 billion of energy deals it's working on this year, according to estimates based on the bank's average fee rate for acquisition advice in the past two quarters.

Together with debt and equity sales for energy companies this year, JPMorgan may collect $483 million in fees, compared with about $339 million during all of last year and $222 million in 2004. JPMorgan is benefiting from its role as the top arranger of syndicated loans for energy companies, said Brian Jennings, 45, a former Lehman banker who's now Devon Energy Corp.'s finance chief in Oklahoma City.

Lehman, an also-ran in energy for most of the past five years, stands to get as much as $616 million in takeover and underwriting revenue, compared with $348 million in 2005 and $285 million in 2004, according to estimates based on average fees. The firm is arranging 22 energy mergers announced this year, the most in the industry, for a total value of $150 billion, Bloomberg data show. That's up from $77 billion of announced deals for Lehman during all of 2005.

Power Costs

Total M&A in the industry is on pace to surpass last year's record $510 billion as would-be buyers from Cnooc Ltd., China's No. 1 offshore oil producer, to Moscow-based OAO Gazprom, the world's biggest natural-gas producer, say they'll pursue more acquisitions.

We're in this frenzy with all this momentum,'' said Devon's Jennings.The last time we saw this was in the late 70s and early80s.''

Crude oil, averaging more than $64 a barrel this year, hit a record $75.40 on July 5 after North Korea test-fired missiles and Iran rejected calls for a prompt reply to a European Union plan to end uranium enrichment. Economic growth in developing countries such as China and India and increased demand for gasoline in the U.S. are keeping oil near all-time highs.

U.S. demand for electricity is sending power costs higher too, according to U.S. Energy Department data. The average retail price for electricity in April rose 12 percent from a year earlier to 8.54 cents per kilowatt-hour. Over the past year, electrical consumption rose 2.9 percent from the previous 12 months, led by a 5 percent increase in household use.

Hostile Bid

Part of the reason the energy market is so active lately is due to the high price of oil, which has made reserves that were previously not valuable suddenly worth something,'' said Linda Varoli, vice president of research at Wall Street Access, an institutional brokerage firm in New York.The boom will last as long as oil prices and the economy in general continue to be strong.''

Morgan Stanley and Goldman, the top advisers on energy mergers in 2005, weren't hired to work on E.ON's unsolicited offer for Endesa. Morgan Stanley, the biggest U.S. securities firm by market value, couldn't play a role because of a conflicting relationship with rival Spanish utility Iberdrola SA.

Goldman backed a hostile bid for Endesa last year and may get paid almost nothing for 10 months of work now that the offer by Gas Natural SDG SA has been suspended by two courts. Spain's energy regulator plans to rule in the last week of this month on whether E.ON can proceed with its offer for Endesa.

Goldman spokesman Michael DuVally, Morgan Stanley's Mark Lake and Citigroup's Andrea Hurst declined to comment.

`Luck of the Draw'

Often times, bankers and other advisers are working on a deal, but their client winds up being the losing bidder,'' said Frank Aquila, an M&amp;A <span class="keyword_link"><a href="http://www.jdoasis.com/">lawyer</a></span> at Sullivan &amp; Cromwell LLP in New York.Sort of luck of the draw in those situations.''

After Gas Natural made its surprise bid last September, Endesa contacted Lehman, JPMorgan, Deutsche Bank AG and Citigroup. Lehman put Vereker, who ran the No. 1 European utilities team at Morgan Stanley, and Luis de Guindos, the former Spanish secretary general for economic and competition policy, in charge of its bankers advising Endesa.

Lehman is one of five banks advising Paris-based Gaz de France on the Suez purchase, Bloomberg data show. Morgan Stanley is one of the six working for Suez together with JPMorgan.

League tables, which track investment-banking assignments, don't always reflect what advisers get paid. Morgan Stanley and Citigroup, for example, successfully defended NRG Energy Inc., the second-largest power producer in Texas, from a hostile $7.9 billion bid by Mirant Corp. last month. Such work can be among the most profitable for M&A bankers.

Record Takeovers

In all, a record $1.83 trillion of corporate takeovers were unveiled worldwide in the first half of 2006. Goldman, the second-biggest Wall Street firm by market value, is the No. 1 merger adviser for a sixth year running. Lehman is seventh in the overall standings.

The pace of M&A will pick up in the second half because of the increase in oil prices, said Curt Launer, a former energy analyst at Donaldson, Lufkin & Jenrette Inc. who's now a managing director at New York-based investment bank Sagent Advisors Inc.

In addition to Cnooc and Gazprom, OAO Lukoil, Russia's largest oil producer, Electricite de France SA, the world's No. 1 power company, and Oil & Natural Gas Corp., India's biggest oil explorer, are on the list of potential buyers.

The U.S. list includes Warren Buffett's Berkshire Hathaway Inc. of Omaha, Nebraska, Fort Worth, Texas-based XTO Energy Inc. and Chesapeake Energy Corp. of Oklahoma City.

``It's the old saw that it's cheaper to buy a barrel of oil on Wall Street than to drill for it,'' Launer said.

To contact the reporters on this story: Dan Lonkevich in New York at [email protected] ; Dana Cimilluca in New York at [email protected] .

ML - Have been in Calgary forever. Have not been seen much in the oil sands and haven't done much generally GS - Hired two CIBC bankers in 2005, hired rest of team externally; have not been very visible on announced deals but are rumoured to have a pretty decent M&A pipeline LB - Hired four CIBC bankers in 2007; rock-star team; last 12 months did ~C$2 bn of oil sands financing - expect very good things MS- Hired an ex-MS banker from TD, hired an analyst from TD; don't yet have office space and are not expected to be competitive CS - Have been covering Calgary somewhat successfully out of Houston; missed the boat on key MD hirings but have made noises about starting an office here in Calgary Citi - Have commerical banking in Calgary; have made noises about starting an office but rumours that recent negotiations failed UBS - Have equity research and commodity trading in Calgary but IB covers Calgary out of Toronto with limited success

How is Morgan Stanley Houston?

What is the culture like and what kind of player are they?

I think they are really underrated. UBS, CS and LB make all the noise but MS-Houston is right there.

How is Morgan Stanley Houston?

What is the culture like and what kind of player are they?

I think they are really underrated. UBS, CS and LB make all the noise but MS-Houston is right there.

I would also like to know about Morgan Stanley Houston, if anyone has info

These energy group rankings are very dated. People are copy/pasting the ranks from two years ago, which are no longer applicable.

">CS

energybanker are you in houston?

I definitely think Barclays (the old Lehman energy group) is still on top by a long shot. The real question is will this group stay with Barclays / will they integrate seamlessly. I could see Greg Pipkin saying to hell with Barclays and starting his own shop as soon as his contract expires.

PS - ML at #3 is way too low, they've had troubles but are still quite strong. I pretty much agree with the rest of energybanker's rankings. Things could shake up quite a bit in this environment though.

I wonder how long Pipkin's contract is for.

The integration seems to be moving quickly as Barclays prior the to purchase had started a Houston IBD operation months ago, and that small team will be moving into Pipkin's 30 man operation by year-end.

Additionally, would you all say it's better to be in the Houston office than the NY office for energy groups if you're joining a top energy group? Or is it case-by-case basis?

Thanks.

Additionally, would you all say it's better to be in the Houston office than the NY office for energy groups if you're joining a top energy group? Or is it case-by-case basis?

If you are talking about oil & gas, then Houston without a doubt. Most of the major domestic oil & gas companies are HQ'd in Texas, Oklahoma, or Colorado. If you're aiming for power, metals and mining, etc. then I would say New York.

I wonder how long Pipkin's contract is for.

This is a good question. If they were smart, they locked him up for a good 5-10 years and will treat him quite well. If not, be looking for "Pipkin & Co." to appear soon.

Yes, I am in Houston...and I am an investment banker.

Energy banker is clearly a first year and has no idea what the space is like or who the leaders in the space are. How about you actually do a deal before giving your rankings energybanker1!

i am in houston as well but in s&t

@bwils29,

would you mind posting what you think the Houston energy group rankings are?

bwlls29 are you even in energy banking?

let's hear it bwils29

If the Lehman energy group were to leave Barclays I think they would potentially be shooting themselves in the foot. Unlike other areas within investment banks, in commodities IBD and S&T feed off of each other. One side is always bringing deals to the other sides, and if they work together they can leverage their strengths to bring in massive deals.

So a strong energy IBD working without a strong S&T desk is fighting with one hand tied behind their backs, same as if a strong S&T desk has to rely on a weak IBD group.

@skins1:

Good point.