•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    Q1 2013 totals $21 billion globally as markets pause after Q4 buying spree

    Brian Lidsky, PLS Inc., Houston

    PLS reports that global upstream oil and gas M&A activity in Q1 2013 slowed to $20.6 billion in 106 deals with values disclosed (176 total deals) compared to a record $140.9 billion in Q4 2012 with 208 deals with values disclosed (306 total deals). The slowdown occurred across all regions worldwide. PLS views this slowdown as a market pause as many players rushed to the altar late last year in advance of US policy unknowns in 2013 related to the fiscal cliff and tax changes.

    The two global regions of deal making strength in Q1 were the United States and Africa, with $13.1 billion and $4.2 billion in deals respectively (combined 85% of global totals). Conversely, activity in Canada ($0.5 billion), the North Sea ($0.9 billion) and Australia ($0.2 billion) slowed to a crawl.

    The marketplace is poised to pick up. North American natural gas prices have rebounded to the $4.00-plus level after hitting sub-$2.00 a year ago. Oil prices remain strong and relatively stable. Buying by Asian and Chinese NOCs also continues to be strong and consistent. In fact, China's buying since 2008 surpassed the $100 billion mark in Q1 2013 and accounted for 41% of global deal value during the quarter. MLPs continue to garner capital market support and, finally, there is a plentiful supply of high-quality assets from acreage to full operated positions on the market.

    In terms of valuation in the US, PLS's oil valuation benchmarks are currently $100,000 per flowing bbl and $23.50 per bbl proved. For gas, the benchmarks are $5,250 per flowing Mcf and $1.35 per Mcf proved. These benchmarks represent select criteria including last six month averages.

    As shown in the tables below, the marketplace is healthy with a diversity of buyers and sellers.

    In the US, Midstates Petroleum bought a large oil-weighted portfolio in the western Anadarko basin of Oklahoma and Texas for $620 million. The deal adds 8,000 boe/d (67% liquids) and 140,000 net acres (60% HBP) with multiple stacked-pay drilling objectives. According to Midstates chairman and CEO John Crum, "the acquisition greatly enhances our scope, scale and identified resource potential. On a variety of key metrics and in particular cash flow, the transaction is immediately accretive in 2013."

    PennVirginia made a "transformational" $401 million deal to buy Magnum Hunter's Eagle Ford assets. The acquisition of 40,600 gross acres (19,000 net) is adjacent to PVA's existing position in the volatile oil window and brings PennVirginia's total position to 83,000 gross acres (54,000 net). Now with up to 640 drilling locations ahead (or eight years of inventory), PennVirginia expects to ramp to a six-rig program and achieve significant high-margin growth. PLS values this deal at $75,000 per daily boe and $11,172 per acre.

    In the Barnett, Quicksilver sold an undivided 25% interest in 130,000 net acres (60% HBP) to Tokyo Gas, Japan's largest provider of city gas serving more than 10 million customers in the Tokyo metropolitan area and surrounding Kanto region. Before the deal, the assets were producing 275 MMcfe/d (25% liquids). PLS values this deal at $6,700 per daily Mcf and $2,000 per net Barnett acre.

    In Canada, the landmark deal of the year thus far is the Centrica plc and Qatar Petroleum's (60/40) joint purchase of the conventional Canada gas portfolio of Suncor Energy for $1.0 billion. The assets represent the remaining conventional gas portfolio that Suncor acquired with its March 2009 $18.2 billion merger with Petro-Canada. According to Centrica, the deal brings 978 Bcfe (90% gas) of proved and probable reserves and another 3 Tcfe of contingent resources.

    Internationally, Lukoil paid $2.05 billion to acquire 100% of ZAO Samara-Nafta (a Russian company owned 90% by Hess Petroleum and 10% by Simon Kukes). Current production is estimated to be 50,000 bbl/d. The deal implies a value of $41,000 per daily bbl.

    The markets remain well-supplied with deal inventory. As of April 1, our global Deals in Play tally is $116 billion (compared to $85 billion a quarter ago) and our North America Deals in Play tally is $50 billion (compared to $39 billion).

    PLS Inc., Monthly Deal Monitor - Select transactions 03/17/13 - 04/16/13

    PLS Inc., Monthly Deal Monitor - Select transactions 03/17/13 - 04/16/13

    Most Popular

    Related Articles

    Shandong Offshore International acquires Northern Offshore

    06/30/2015 China’s Shandong Offshore International Co. Ltd. has acquired Bermuda-based Northern Offshore Ltd., which has offices in Houston. The cash transaction is valued at NOK 1.3 billion ($164.64 million)...

    European Commission clears merger between Dresser-Rand and Siemens

    06/30/2015

    The European Commission has cleared Dresser-Rand Group Inc.’s proposed merger with Siemens. All of the conditions regarding regulatory matters have now been satisfied.


    Williams rejects $48B buyout offer from Energy Transfer Equity

    06/22/2015 Williams Co. has rejected a $48 billion buyout offer from Energy Transfer Equity LP. Williams plans to explore strategic alternatives following receipt of Energy Transfer Equity’s unsolicited propo...

    Shell-BG $70B merger gains US clearance

    06/17/2015 Royal Dutch Shell plc says that its $70 billion merger with BG Group plc has cleared its first antitrust hurdle by receiving early termination of the US antitrust waiting period from the US Federal...

    Vedanta to merge with Cairn India

    06/15/2015

    Vedanta Ltd., Cairn India Ltd., and Vedanta Resources plc have confirmed a merger between Vedanta Ltd. and Cairn India.

    Matador closes Delaware Basin joint ventures

    06/09/2015 Matador Resources Co. has completed its joint ventures with certain affiliates of HEYCO Energy Group Inc., the former parent company of Harvey E. Yates Co., before HEYCO’s merger with a wholly owne...

    More Oil & Gas Financial Articles

    Shandong Offshore International acquires Northern Offshore

    Tue, Jun 30, 2015

    China’s Shandong Offshore International Co. Ltd. has acquired Bermuda-based Northern Offshore Ltd., which has offices in Houston. The cash transaction is valued at NOK 1.3 billion ($164.64 million), and is expected to close during the first half of August.

    European Commission clears merger between Dresser-Rand and Siemens

    Tue, Jun 30, 2015

    The European Commission has cleared Dresser-Rand Group Inc.’s proposed merger with Siemens. All of the conditions regarding regulatory matters have now been satisfied.


    Williams rejects $48B buyout offer from Energy Transfer Equity

    Mon, Jun 22, 2015

    Williams Co. has rejected a $48 billion buyout offer from Energy Transfer Equity LP. Williams plans to explore strategic alternatives following receipt of Energy Transfer Equity’s unsolicited proposal to acquire Williams in an all-equity transaction at a stated per share price of $64.00. The proposal was also contingent on the termination of Williams’ pending acquisition of Williams Partners LP.

    Shell-BG $70B merger gains US clearance

    Wed, Jun 17, 2015

    Royal Dutch Shell plc says that its $70 billion merger with BG Group plc has cleared its first antitrust hurdle by receiving early termination of the US antitrust waiting period from the US Federal Trade Commission.

    Vedanta to merge with Cairn India

    Mon, Jun 15, 2015

    Vedanta Ltd., Cairn India Ltd., and Vedanta Resources plc have confirmed a merger between Vedanta Ltd. and Cairn India.

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ