•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    US Oil & Gas M&A activity reaches highest 1Q volume in over a decade

    Upstream, foreign buyers set precedent for most deal volume in any 1Q over past five years

    Mergers and acquisitions (M&A) in the oil and gas industry reached the highest first quarter level of deal volume in more than a decade due to increased activity in the upstream sector and interest in oil and gas assets by foreign players, according to PwC US. Although deal activity was high, the total value of deals dipped compared to the fourth quarter of 2013 due to companies divesting smaller non-core assets, a trend that PwC expects to continue through 2014.

    For the three month period ending March 31, 2014, there were a total of 43 oil and gas deals with values greater than $50 million accounting for $19.8 billion, compared to 41 deals in the first quarter of 2013. However, on a sequential basis, deal volume in the first quarter of 2014 dropped by 23% from the 56 deals in the fourth quarter of 2013, with total deal value in the first three months of the year declining 54% from $43.0 billion in the fourth quarter of 2013.

    "The first three months of 2014 represented a historic first quarter across the board led by deal activity in the upstream sector, including in the Gulf of Mexico and interest from foreign players," said Doug Meier, PwC's US energy sector deals leader. "Divestures continue to be a major source of deal activity, but we are seeing smaller deals taking place; larger portfolio adjustments have already been made. Smaller deals are also happening in the oilfield services sector as a result of companies selectively looking to fill in the white space by adding assets that can increase productivity and reduce costs. We're working with companies to analyze the deals that are on the table to improve overall business operations."

    "The first three months of 2014 represented a historic first quarter across the board led by deal activity in the upstream sector, including in the Gulf of Mexico and interest from foreign players," — Doug Meier, PwC "The first three months of 2014 represented a historic first quarter across the board led by deal activity in the upstream sector, including in the Gulf of Mexico and interest from foreign players," — Doug Meier, PwC

    Upstream deals accounted for 63% of deal activity in the first quarter of 2014 with 27 transactions, representing $14.2 billion, or 72% of total first quarter deal value. There were four midstream deals that contributed $1.3 billion, a 91% decrease in deal value from the fourth quarter of 2013. Nine oilfield services deals totaled $2.3 billion, representing a 390% year-over-year growth in deal value and a 350% year–over-year growth in deal volume. Three downstream deals during the first quarter of 2014 added $2.0 billion.

    Foreign buyers announced 12 deals in the first quarter of 2014, which contributed $8.3 billion, or 42% of total deal value, versus 10 deals valued at $4.3 billion during the same period last year, representing a 92% increase in deal value. On a sequential basis, the number of total deals remained the same as total deal value increased 72%.

    Deal activity in the Gulf of Mexico represented five deals worth $3.9 billion, compared to one deal worth $100 million in the fourth quarter of 2014.

    For deals valued at over $50 million, asset transactions continued to dominate total deal volume during the first quarter of 2014 with 36 deals representing 84% of total deal volume. Deal value reached $13.2 billion or 67% of total deal value for the first quarter of 2014. Corporate transactions represented seven deals totaling $6.5 billion during the quarter.

    According to PwC, there were 17 deals with values greater than $50 million related to shale plays in the first quarter of 2014, totaling $6.2 billion, or 31% of total deal value. In the upstream sector, shale deals represented 14 transactions and accounted for $5.7 billion, or 29% of total upstream deal value in the first quarter of 2014. There were two midstream shale-related deals in the first quarter of 2014, representing $210 million, a drop in volume from the six deals representing $7.7 billion in the first quarter of 2013.

    "First quarter shale deal activity was on par with what we anticipated as we see the continued shift towards unconventionals," said John Brady, a Houston-based partner with PwC's energy practice. "A third of total deal value was related to shale plays in the first three months of the year, indicating the ongoing attractiveness of capitalizing on the long-term prospects for shale gas. Unconventionals will continue to play a large part in deal activity going forward, as will finding opportunities for reducing cycle times and increasing productivity through new technologies and processes to increase speed and efficiency."

    The most active shale plays for M&A with values greater than $50 million during the first quarter of 2014 include the Eagle Ford in Texas, which had five deals with a total value of $3.0 billion, followed by the Bakken and Permian plays with three deals each, representing $863 million and $276 million, respectively. The Utica Shale generated only one deal; however this deal represented the second largest in value in the first quarter at $924 million. The Niobrara contributed one deal worth $180 million.

    During the first quarter of 2014, master limited partnerships (MLPs) were involved in 11 transactions, representing about 27% of total deal activity in the quarter, consistent with recent historical levels.

    Financial investors continued to show interest in the oil and gas industry with two total transactions, totaling $1.9 billion during the first quarter of 2014, which was more than a 230% jump in deal value compared to the same time period in 2013.

    "Although financial investor deal activity was low during the quarter, we're still seeing continued interest from these players, particularly in the upstream and Gulf of Mexico as they're looking to capitalize on divested assets from corporates," added Rob McCeney, PwC US energy & infrastructure deals partner.

    PwC notes that during the first quarter of 2014, there were five mega deals, representing $10.1 billion, compared to eight mega deals worth $19.7 billion in the first quarter of 2013.

    PwC's Oil & Gas M&A analysis is a quarterly report of announced US transactions with value greater than $50 million analyzed by PwC using transaction data from IHS Herold.

    Related Articles

    AziLat secures acreage position offshore Brazil

    08/21/2014 AziLat Ltd., a South America-focused oil and gas exploration company, has signed a farm-in agreement with Chariot Brasil Petróleo e Gás Ltda., a wholly owned subsidiary of Chariot Oil & Gas Ltd...

    Amelia Resources sells Tuscaloosa Marine Shale acreage

    08/20/2014 Amelia Resources LLC has sold 50,000 net acres in the Tuscaloosa Marine Shale (TMS) play. The company has been retained as a technical consultant to market 50,000 net acres of newly acquired leases...

    Breitburn updates on acquisition of QR Energy

    08/20/2014 Breitburn Energy Partners LP and QR Energy LP have received notification of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in co...

    Carrier forms Delaware Basin JV with Panther Energy II

    08/20/2014 Carrier Energy Partners LLC and Panther Energy Company II LLC have signed a joint venture agreement for the two companies to develop 15,000 acres in Culberson, Reeves, and Pecos counties, Texa...

    Progressive Equities reports funding of Redhawk Resources–Fund I

    08/20/2014 Progressive Equities LLC has reported the completion of the funding of a new oil and energy partnership on behalf of Redhawk Resources–Fund I. Progressive Equities LLC, Redhawk Resources LLC, and C...

    More Oil & Gas Financial Articles

    AziLat secures acreage position offshore Brazil

    Thu, Aug 21, 2014

    AziLat Ltd., a South America-focused oil and gas exploration company, has signed a farm-in agreement with Chariot Brasil Petróleo e Gás Ltda., a wholly owned subsidiary of Chariot Oil & Gas Ltd. to blocks BAR-M-292, BAR-M-293, BAR-M-313, and BAR-M-314 in the Barreirinhas Basin, offshore Brazil.

    Amelia Resources sells Tuscaloosa Marine Shale acreage

    Wed, Aug 20, 2014

    Amelia Resources LLC has sold 50,000 net acres in the Tuscaloosa Marine Shale (TMS) play. The company has been retained as a technical consultant to market 50,000 net acres of newly acquired leases in the TMS play.

    Breitburn updates on acquisition of QR Energy

    Wed, Aug 20, 2014

    Breitburn Energy Partners LP and QR Energy LP have received notification of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with Breitburn’s proposed merger with QR Energy, thereby satisfying a condition to the closing of the transaction.

    Carrier forms Delaware Basin JV with Panther Energy II

    Wed, Aug 20, 2014

    Carrier Energy Partners LLC and Panther Energy Company II LLC have signed a joint venture agreement for the two companies to develop 15,000 acres in Culberson, Reeves, and Pecos counties, Texas. 

    Progressive Equities reports funding of Redhawk Resources–Fund I

    Wed, Aug 20, 2014

    Progressive Equities LLC has reported the completion of the funding of a new oil and energy partnership on behalf of Redhawk Resources–Fund I. Progressive Equities LLC, Redhawk Resources LLC, and Culbreath Oil and Gas Co. are the companies creating the partnership.

    Most Popular

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ