Upstream oil and gas M&A and capital raising deals totalled US$130.5 billion in 2Q19, says GlobalData

Praveen Kumar Karnati, Oil and Gas Analyst at GlobalData, commented: “A total of 107 M&A deals, with a combined value of US$21.1 billion, were recorded in the conventional segment, and 44 deals, with a combined value of US$62.3 billion, were recorded in the unconventional segment in 2Q19.”

Capital raising, through equity offerings, witnessed a substantial increase in deal value, recording US$13 billion in 2Q19, compared with US$1.5 billion in 1Q19. The number of equity offering deals also increased by 19% from 88 in 1Q19 to 105 deals in 2Q19.

Capital raising, through debt offerings, registered an increase of 48% in the number of deals and 62% in deal value with 49 deals, with a combined value of US$28.8 billion, in 2Q19, compared with 33 deals, with a combined value of US$17.8 billion, in the previous quarter. In the upstream industry in 2Q19, 10 private equity/venture capital deals, with a combined value of US$5.3 billion, were recorded, compared with 16 deals, with a combined value of US$1.3 billion, in 1Q19.

Karnati continues: “The top M&A deal of 2Q19 was Occidental Petroleum’s acquisition of Anadarko Petroleum for US$55 billion, including the assumption of Anadarko’s debt. As of year-end 2018, the company had proven (1P) reserves of approximately 667 million bbl of oil, 268 million bbl of natural gas liquids (NGLs), and 3230 billion ft³ of gas. In 2018, the company had production of approximately 140 million bbl of oil, 38 million bbl of NGLs, and 390 billion ft3 of gas. The transaction implies values of US$82 613.17/boe of daily production and US$37.33/boe of 1P reserves.”

One of the top capital raising deals of 2Q19 was Occidental Petroleum’s agreement to issue 100 000 shares of cumulative perpetual preferred shares, at a price of US$100 000 per share, to raise gross proceeds of US$10 billion. The shares will be subscribed to by Berkshire Hathaway Inc. The preferred stock will accrue dividends at 8% per annum (or with respect to dividends that are accrued and unpaid, 9%).

Occidental Petroleum will also issue warrants to purchase up to 80 million shares of Occidental common stock at an exercise price of US$62.5 per share. The warrant to be issued with the preferred stock may be exercised in whole or in part and from time to time, until one year after the redemption of the preferred stock. The placement is contingent upon Occidental entering and completing its proposed acquisition of Anadarko.

Read the article online at: https://www.oilfieldtechnology.com/special-reports/13092019/upstream-oil-and-gas-ma-and-capital-raising-deals-totalled-us1305-billion-in-2q19-says-globaldata/