While the value of mergers and acquisitions in the oil and gas sector in Q2 was greater than in Q1, they are still unremarkable, considering that almost 90% of the M&As in the sector was a single deal, according to data released by Drillinginfo on Tuesday, cited by Reuters.
Without the Occidental/Anadarko tie up, Q2 M&A in the US exploration and production companies sector reached just shy of $8 billion—the mega merger accounted for the remaining $65 billion.
That less than $8 billion in oil deals in Q2 is about half of the $19 billion quarterly average seen across 2017 and 2018, the Drillinginfo data showed, as lenders cinch tighter their purse strings to sector players, and as investors clamor for companies to dig deep into their pockets to return money to shareholders rather than to amass additional assets.
Global mergers and acquisitions in this sector as of late has focused on disposing of non-profitable assets and optimizing the ones they intend to hang onto. To this end, we’ve seen Shell moving to divest nearly $10 billion in assets over a two year period while at the same time, acquiring BG Group for a cool $53 billion, not to mention sonnen, Greenlots, Limejump, and more. We’ve seen ExxonMobil dump some GoM assets in favor of some assets in Brazil. Total made a move to snatch up Toshiba’s US LNG business And that is just the start.
For the oil and gas companies in the United States, Q1 2019 mergers and acquisitions hit a 10-year low—to $1.6 billion according to Drillinginfo. This compares to $22.3 billion for Q1 2018. For this reason, the increase in M&As this quarter over the levels seen in Q1 is an unimpressive figure, relatively speaking.
By Julianne Geiger for Oilprice.com
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