•  
  •  
  •  
  •  
  •  
  • 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.”

     

    Related Articles

    BP names new CEO of US shale unit

    08/21/2014

    BP has named David Lawler as CEO of its US Lower 48 Onshore business.

    Former Bank of England Chief Economist to Join BP

    08/05/2014

    The Bank of England reported Aug. 4 that its former chief economist Spencer Dale, who had just assumed a new role at the bank, is leaving the BoE to become chief economist at oil major BP.

    BP, AeroVironment launch first FAA-approved, UAS over land and water

    06/10/2014 In a deal that marks the first time unmanned aircraft systems will perform routine commercial services over land in compliance with FAA regulations, AeroVironment has been contracted by BP to provi...

    TPAO to buy Total's stake in Azeri gas project for $1.5 B

    06/02/2014 Turkey's state oil company TPAO has signed a $1.5 billion deal to acquire Total's 10% stake in Azerbaijan's Shah Deniz gas project, Reuters said. The agreement increases TPAO's stake in the project...

    Aker wins offshore Norway contract from BP

    05/30/2014

    Aker Solutions has secured a framework agreement to provide engineering, modifications, and maintenance services for BP-operated oil and gas fields offshore Norway.

    More Oil & Gas Financial Articles

    BP names new CEO of US shale unit

    Thu, Aug 21, 2014

    BP has named David Lawler as CEO of its US Lower 48 Onshore business.

    Former Bank of England Chief Economist to Join BP

    Tue, Aug 5, 2014

    The Bank of England reported Aug. 4 that its former chief economist Spencer Dale, who had just assumed a new role at the bank, is leaving the BoE to become chief economist at oil major BP.

    BP, AeroVironment launch first FAA-approved, UAS over land and water

    Tue, Jun 10, 2014

    In a deal that marks the first time unmanned aircraft systems will perform routine commercial services over land in compliance with FAA regulations, AeroVironment has been contracted by BP to provide mapping, GIS and other commercial information services the Prudhoe Bay oil field for a five-year period.

    TPAO to buy Total's stake in Azeri gas project for $1.5 B

    Mon, Jun 2, 2014

    Turkey's state oil company TPAO has signed a $1.5 billion deal to acquire Total's 10% stake in Azerbaijan's Shah Deniz gas project, Reuters said. The agreement increases TPAO's stake in the project to 19% from a previous 9%, while Total exits the project.

    Aker wins offshore Norway contract from BP

    Fri, May 30, 2014

    Aker Solutions has secured a framework agreement to provide engineering, modifications, and maintenance services for BP-operated oil and gas fields offshore Norway.

    Most Popular

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ