FU: Oil industry asset deals surge in third quarter
Oil and gas assets in the U.S. were bought and sold at a rapid pace during the third quarter, with deal value more than doubling compared to the same period last year, according to a PwC report.
The rush to oil and other liquids-rich production, which offers higher value than dry natural gas, led to a surge in land deals in the energy sector, the advisory firm found in an analysis of deals with values above $50 million.
There were 34 asset deals totaling $31.4 billion during the three month period ending Sept. 30. That’s a 131 percent increase in value over the same period in 2011.
Energy sector deals “were dominated by upstream asset transactions as oil and gas companies pursued oily plays due to natural gas prices continuing to remain depressed,” said Rick Roberge, principal in PwC’s energy mergers and acquisitions practice.
The largest portion of deals related to shale plays occurred in North Dakota’s oil-rich Bakken, which had six deals valued at a total $4.4 billion during the quarter. The Eagle Ford shale in South Texas also was busy, with three deals totaling $658 million.
Several major oil companies have been looking to expand their position in the Eagle Ford shale, viewed as a high-value region for its liquid-rich content. Marathon Oil announced Wednesday that it had reached agreements to buy nearly 25,000 net acres worth $1 billion in the Eagle Ford so far this year. It also plans to sell off 100,000 acres there.
However, there was slight decline in total mergers and acquisitions above $50 million in the industry during the third quarter. Compared to the same period 2011, the number of energy sector deals of that value dropped from 44 to 39. Their total price fell from $41.1 billion to $33.7 billion.
Still, 2012 has been a busy year on the whole. MarketWatch calls the year “one of the best in recent memory for mergers and acquisitions,” citing data from Dealogic. Energy companies have executed deals worth $297 billion so far this year, already surpassing all of 2011. Last year ended with $273 billion in energy sector deals, according to MarketWatch.
The Gulf of Mexico is contributing to the boom, as it rebounds from the 2010 oil spill and drilling moratorium. During the third quarter, five deals were made related to the Gulf, worth $7.4 billion, the highest M&A deal value since the spill.
“Now that the Gulf is clearly back in business for M&A, we believe oil and gas companies will increasingly look there for deal opportunities going forward,” Roberge said.
