Mergers and acquisitions in U.S. oil and gas fell by 1.49 percent below the 12-month average last month, according to GlobalData. The biggest deal by far for the month was Chevron’s acquisition of Noble Midstream Partners, which fetched $1.32 billion.
The Noble Midstream Partners deal represented about a fifth of the total value of March deals, Offshore Technology reports, citing GlobalData figures, with the total standing at $5.14 billion across 66 deals. The number of deals in March was in line with the 12-month average, which stood at 67 deals.
In terms of types of deals, mergers and acquisitions were by far the most. These accounted for 66.7 percent of all dealmaking in March and 44 of the 66 deals. Venture capital funding came in second, accounting for 19 deals, and private equity financing came in third with barely three deals.
M&A activity in the U.S. oil and gas industry was slow to take off during the pandemic as everyone retrenched and waited to see how the situation developed before going on the hunt for discount assets. The second half of 2020 saw, however, some huge deals.
ConocoPhillips acquired Concho Resources for $9.7 billion in October. Chevron bought Noble Energy for $5 billion, also in October. Pioneer Natural Resources took over Parsley Energy for $4.7 billion. And Devon Energy bought WPX Energy for $2.6 billion.
These deals were all motivated by perhaps the grimmest ever outlook for oil demand amid a pandemic that destroyed millions of barrels in daily consumption. Consolidation was the only solution for many in the industry. For some heavily debt-laden players, it was a matter of life or death.
Now, the outlook for oil demand has improved considerably as lockdowns end and vaccinations gather speed. This could motivate even more deals: after surviving the worst, oil and gas players would want to position themselves as best they can for the already ongoing recovery of the industry.
By Irina Slav for Oilprice.com
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