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US oil and gas deal value and volume increases

Oilfield Technology,

PwC has said that mergers and acquisitions activity in the oil and gas industry have increased substantially over the second quarter this year in terms of value and volume compared to both Q1 and the same time in 2013. An increase in mega deal activity, in partnership with ongoing interest from foreign and domestic buyers for divested assets built on the high level of deal activity in the first quarter of the year, resulting in a strong opening half of deal activity.

PwC have reported that for the three month ending June 30, there were a total of 54 oil and gas deals with values greater than US$ 50 million accounting for US$ 42.2 billion, compared with 47 deals worth US$ 30.3 billion in the second quarter last year. Deal volume in the second quarter of 2014 increased 15% from the 47 deals in the first quarter of 2014, with total deal value increasing 131% from US$ 18.3 billion in the first quarter of this year. The first half of 2014 saw 101 total deals worth US$ 60.5 billion.

In numbers

For deals over US$ 50 million, asset transactions continued to dominate total deal volume during the second quarter of the year with 44 deals representing 81% of total deal volume. Asset deal value hit US$ 27.3 billion or 65% of total deal value for the second quarter. Corporate transactions represented 10 deals totalling US$ 14.9 billion during the quarter.

PwC have reported that foreign buyers announced 15 deals in the second quarter, accounting for US$ 8.5 billion in value, a significant increase over one deal worth US$ 590 million during the same period in 2013. The number of foreign deals increased 50% from the 10 deals in the first quarter of the year. Total value increased by 98%.

12 mega deals were recorded during Q2, representing US$ 30.8 billion, or 73% of total deal value, driven by larger oil and gas companies looking to divest valuable assets.

Looking upstream and deals accounted for 61% of total deal activity in Q2. There were 10 midstream deals that contributed US$ 12.1 billion, and seven downstream deals which added US$ 7.5 billion in Q2. In Q2 of 2013 there were 12 midstream deals and five downstream deals.

PwC has said that there were 21 deals with values greater than US$ 50 million related to shale plays in Q2 of this year, totalling US$ 20 billion. In the upstream sector, shale deals represented 17 transactions and 51% of total upstream deal value. There were four midstream shale related deals, representing US$ 9 billion in Q2 2014.

Master limited partnerships (MLPs) were involved in 19 transactions in Q2 and represented approximately 35% of total deal activity in the quarter. Financial investors continued to show interest in the oil and gas industry with four total transactions, equalling US$ 7.7 billion during Q2 2014, an increase of over 400% in deal value compared to the same period last year.

Deal activity in the Gulf of Mexico represented US$ 251 million split over two deals, a decrease from the five deals worth US$ 4 billion in the first quarter of this year.


Doug Meier, energy sector deals leader, PwC US said, ‘the first three months of 2014 set the stage for the strongest second quarter of oil and gas deal activity that we’ve seen in the last five years. Over the past three months, we continue to see companies looking to realign their portfolios and divest non-core assets, which provided opportunities for acquirers with cash and capital access.

‘A theme to watch is whether large consumers of commodities such as natural gas accelerate their investment in E&P assets via investments or acquisitions. Additionally, we’ll keep an eye on oil export opportunities given the recent rulings on condensate exports.’

John Brady, Houston based partner at PwC’s energy practice said, ‘in the second quarter, overall shale deal value jumped substantially reaching US$ 20 billion, compared to US$ 4.4 billion in the first quarter of 2014 and US$ 7.7 billion during the second quarter of 2013. The continued interest in shale plays is a testament to how companies and investors view the success of the unconventional landscape, especially as new technologies and methods come to fruition that increase speed and efficiency from upstream and drilling processes to transportation and bringing oil and gas to market.’

Rob McCeney, PwC US energy and infrastructure deals partner said, ‘there was an increase in financial investor involvement in the second quarter focused on midstream divestitures evenly split between corporate and asset. In the second half of 2014, we expect private equity to continue to monetise assets, but also pursue divested assets in the midstream and upstream space as they continue to look for opportunities to deploy capital.’

Adapted by Claira Lloyd

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