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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Oil & Gas M&A Just Broke All Records

Cushing oil storage

I talked yesterday about prime oil and gas assets coming for sale in Asia. And some new data this week shows it’s not just that part of the world where M&A deals are surging.

In fact, 2017 has been the best year ever for petro-deals, so far.

Numbers reported this week from M&A specialists Dealogic showed that total oil and gas transactions in the first six weeks of the year have already reached $63.3 billion. With a full 98 transactions having been completed up to February 13.

And here’s the most incredible thing: that represents the highest level of M&A ever recorded for this period. Representing a four-times increase on the amount seen during the same timeframe in 2016.

Buyers have been particularly active in the U.S. shale patch. With American deals accounting for about 85% of the value — totaling $53.6 billion, up from just $11.8 billion for the same period last year.

That includes a couple of mega-deals: an $11.4 billion transaction between midstream outfit Williams Co. and its master limited partner Williams Partners, as well as the $17.2 billion takeover of ONEOK Partners by its parent firm.

But aside from those big transactions, there have been plenty of other sizeable deals. Including a number of multi-billion deals on acreage in the Permian Basin of Texas.

Petro-destinations like the U.K. have also been active. With $3.9 billion in deals already completed here — mainly driven by the purchase of Shell’s North Sea assets by Chrysaor at the beginning of this month.

Canadian M&A also chipped in $1.3 billion in value, showing that deals are happening in several parts of the world. Related: Middle East Oil & Gas Investment Surges To $294 Billion

The amazing thing is, all this is happening at relatively low energy prices, with oil continuing to languish around $50. But the fact that prices have at least been stable for several months is giving acquirers confidence to make longer-term assessments about asset value, and jump on opportunities they see in the “new normal” oilpatch.

That’s good news for financially-sound firms developing profitable plays — which may find themselves in the crosshairs of the current M&A wave. Also notable is the fact that 2017’s big deals have mostly come from corporate sources, with very little of the cash sourced from the big private equity pools raised the last year.

If that PE money starts getting in on the act, we could see an even more frenetic pace for deals. Watch for more M&A announcements, with particular focus on the U.S.

Here’s to buying it up.

By Dave Forest

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