•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    WoodMac: Upstream oil and gas M&A activity reaches record $232B in 2012

    Wood Mackenzie

    Asian NOCs net buyers as Majors shift to net sellers

    2012 was another record year for upstream M&A activity totaling $232 billion of spend according to Wood Mackenzie’s annual M&A review. The year was dominated by three major transactions in the second half of the year: Rosneft/TNK-BP; CNOOC/Nexen; and Freeport/Plains. Excluding these deals, while it wasn’t a record high, deal spend was very strong at $138 billion. The four key themes Wood Mackenzie identifies are: Asian National Oil Companies (NOCs) significant buyers with $7 billion of spend; the Major oil companies’ $60 billion swing from net buyers in 2011 to net sellers in 2012, dispensing with $56 billion of assets; continued high spend on unconventional oil and gas assets in North America; and a boom in LNG focused acquisition activity.

    According to Wood Mackenzie’s analysis, disclosed upstream spend for 2012 totalled $232 billion, the highest annual deal spend on record, but it was heavily skewed by three large transactions. Rosneft’s $58 billion purchase of TNK-BP saw it become the world’s largest publicly traded oil company by liquids production; CNOOC/Nexen is the largest ever acquisition by a Chinese NOC; and lastly copper miner Freeport made a surprise return to oil & gas by acquiring US-focused independent Plains E&P for $17.2 billion. Luke Parker, Manager of Wood Mackenzie’s M&A Service says: “If we exclude deals of over $10 billion, deal spend was very strong at $138 billion but substantially lower than the record year we saw in 2010 of £178 billion. The number of M&A deals was also up year-on-year at 456, but fell slightly short of 2010’s watermark of 466.”

    Looking to 2013, Wood Mackenzie says the industry is primed for M&A activity. Parker elaborates: “The Majors have very strong balance sheets and cash flow so we can expect an uptick in activity. The Asian NOCs will continue to play their part, with a second wave of players looking to make up ground on their Chinese counterparts. For both groups, small to mid-size asset acquisitions focused on long life resource themes will remain the focus.”

    The report says key areas to watch for are US tight oil, Canada unconventional gas, exploration focused corporate M&A and big LNG – East Africa in particular. Wood Mackenzie forecasts deal valuations to continue a steady upward trend, with growing industry confidence in the long-term sustainability of high oil prices.

    Delving into the four key themes outlined in the review, Wood Mackenzie remarks that for the first time the NOCs were the biggest spenders by peer group. Significantly, $46.9 billion was spent by Asian NOCs, with Chinese NOCs the largest spenders.  Parker adds; “CNOOC’s $18.5 billion acquisition of Nexen was the headline deal, but in total, CNOOC, Sinopec and PetroChina spent over $31 billion in 2012.” It’s a trend Parker says will continue: “Compatriot CNPC/PetroChina has yet to truly flex its muscles on the international stage: with enormous financial fire-power, 2013 might be the year in which it steps up activity. We expect NOCs to be M&A leaders again in 2013.”

    In contrast, the Majors have never sold as much, and have not spent so little since 2004. As a group, they sold $56 billion of assets in 2012, and made acquisitions totalling US$13 billion.  Having been net buyers in 2011, 2012 represented a negative $60 billion swing in net Acquisitions and &Divestments. “BP led the selling pack, with its exit from TNK-BP the year’s headline deal, whereas ExxonMobil and Shell are the only Majors that could be considered active acquirers in 2012.”

    Despite unconventional M&A spend dropping 28% year-on-year, it remains a key theme totalling $45 billion in 2012. For the first time, oil deals overtook unconventional gas deals, largely due to interest in US tight oil plays, while the US shale gas M&A market collapsed. Parker adds: “The trends we noted in 2012 will persist: Tight oil focused spend will continue its steep upward trajectory as the scale of the resource ensures strong interest from a wide range of potential buyers, and a fragmented corporate landscape provides ample scope for consolidation.  The US will see the vast majority of investment, but Canadian tight oil M&A could grow as embryonic plays are proved up. We also believe Canadian shale gas will continue to attract interest as a feedstock for future LNG developments whereas US shale gas M&A is likely to remain relatively subdued.”

    Wood Mackenzie says there has been over US$60 billion worth of LNG focused acquisitions in the past five years. Parker explains: “LNG focused M&A has boomed. New sources of supply – unconventional gas in Australia and North America, and deepwater volumes in East Africa and Israel – have seen the biggest spend, meanwhile longer established LNG plays – north west Australia in particular – have also seen significant deal flow. We fully expect the market for LNG assets will remain buoyant, with activity again concentrated on pre-development projects during 2013.”

     

    Most Popular

    Related Articles

    Ensco to cut onshore personnel by 15%

    02/19/2015

    On Feb. 17, Ensco plc began a workforce-reduction process, designed to reduce its onshore workforce by 15%, according to the Houston Business Journal.

    Dakota Plains adds board members, forms strategy committee

    02/13/2015 Dakota Plains Holdings Inc.’s board of directors has added two independent directors to the board. It has also formed a Strategy Committee, comprising independent directors, and has engaged SunTrus...

    NGP Energy Capital Management makes executive changes

    02/11/2015

    NGP Energy Capital Management has made two changes to its executive team.

    Petrobras finds oil at Basilisco well in Campos Basin

    02/05/2015

    Petroleo Brasileiro SA (Petrobras) has discovered new oil accumulations in concession BM-C-35 (exploratory block C-M-535), located in the Campos Basin post-salt layer offshore Brazil.

    Dana Gas expands operations in Egypt

    02/03/2015 Dana Gas has reached major milestones in the fulfillment of its growth strategy in Egypt, including the signing of concession agreements for Blocks 1 and 3 in the Nile Delta, a recent signing of a ...

    Chevron, BP, and ConocoPhillips form Gulf of Mexico alliance

    01/28/2015 Chevron Corp.’s subsidiary, Chevron USA Inc., will work with BP and ConocoPhillips to explore and appraise 24 jointly held offshore leases in the northwest portion of Keathley Canyon in the deepwat...

    More Oil & Gas Financial Articles

    Ensco to cut onshore personnel by 15%

    Thu, Feb 19, 2015

    On Feb. 17, Ensco plc began a workforce-reduction process, designed to reduce its onshore workforce by 15%, according to the Houston Business Journal.

    Dakota Plains adds board members, forms strategy committee

    Fri, Feb 13, 2015

    Dakota Plains Holdings Inc.’s board of directors has added two independent directors to the board. It has also formed a Strategy Committee, comprising independent directors, and has engaged SunTrust Robinson Humphrey Inc. to assist the committee.

    NGP Energy Capital Management makes executive changes

    Wed, Feb 11, 2015

    NGP Energy Capital Management has made two changes to its executive team.

    Petrobras finds oil at Basilisco well in Campos Basin

    Thu, Feb 5, 2015

    Petroleo Brasileiro SA (Petrobras) has discovered new oil accumulations in concession BM-C-35 (exploratory block C-M-535), located in the Campos Basin post-salt layer offshore Brazil.

    Dana Gas expands operations in Egypt

    Tue, Feb 3, 2015

    Dana Gas has reached major milestones in the fulfillment of its growth strategy in Egypt, including the signing of concession agreements for Blocks 1 and 3 in the Nile Delta, a recent signing of a gas production enhancement agreement, and the receipt of a $60 million (AED 220 million) payment made by the Egyptian government in December 2014.

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ