Wednesday 6 March 2013, Amsterdam
Our “Oil and Gas Annual Deals Analysis: M&A and Investments Trends - 2012” report is a reliable source of essential data and analysis on mergers and acquisitions (M&As) and financing in the oil and gas industry. The report provides detailed information on M&As, equity/debt offerings, private equity (PE), venture financing and partnership transactions registered in the oil and gas industry in 2012. The report offers detailed comparative data on the number of deals and deal values in the last five years segregated into deal types, segments, and geographies. Besides, the report furnishes information on the top private equity (PE), venture capital (VC), and advisory firms in the oil and gas industry.
We derived the data presented in this report from proprietary in-house deals database, and through primary and secondary research.
Mergers & Acquisitions Increased In The Oil And Gas Industry In 2012
M&As, which include change in ownership and control of companies (We doe not consider this value as a new investment in the market), recorded an increase in deal value from $216.6 billion in 2011 to $234.6 billion in 2012. Q4 2012 particularly recorded the highest deal value of $99.4 billion. Rosneft’s agreement to acquire TNK-BP in two separate transactions, which include the agreement to acquire 50% stake from AAR Consortium for $28 billion and 50% stake from BP for $26.8 billion; Freeport-McMoRan’s agreement to acquire Plains Exploration & Production for $6.9 billion; and BP’s agreement to acquire 5.7% stake in Rosneft from Rosneftegaz for $4.8 billion were the major deals that to led a substantial increase in deal value in Q4 2012. In 2012, 4% of the deals (26 deals valued at greater than $2 billion each) contributed $155.3 billion to the total deal value of $234.6 billion in 2012. The industry majors endeavored to capture greater number of opportunities in the oil and gas sector in 2012, as the global credit market recorded continuous improvement with the stabilization of commodity prices.
The number of M&A deals decreased marginally from 691 deals in 2011 to 688 deals in 2012. The number of deals stood at 163, 154, 178 and 193 deals in Q1, Q2, Q3 and Q4 2012 respectively.
The average deal value in the oil and gas industry registered an increase from $494.4m in 2011 to $545.5m in 2012. The average median deal value also increased from $50m in 2011 to $62.9m in 2012. Europe, in particular, registered a huge increase in average deal value from $536.7m in 2011 to $1.1 billion in 2012, owing to high value M&A activity in the region.
North America remained the most attractive destination with more low risk unconventional shale prospectus deals. The region accounted for 49% of the deals and 50% of deal value with 336 deals worth $116.9 billion, showing a marginal decline from 341 deals worth $136.3 billion in 2011. Of the total, the US recorded 232 deals worth $75.4 billion and Canada recorded the remaining 104 deals worth $41.5 billion in 2012.
M&As were dominant in the upstream sector with 291 deals in 2012, followed by the equipment & services sector with 285 deals. In value terms, upstream sector recorded the highest M&A deal value of $141.4 billion in 2012, followed by the downstream sector with $84.5 billion.
Asset Transactions Increased In The Oil And Gas Industry In 2012
Asset transactions in the oil and gas industry, which include the purchase of oil and gas properties and equipment, registered an increase of 39% in deal value with $120.3 billion in 2012, as compared to $86.5 billion in 2011. Such increase was due to some of the high-value deals worth $40.7 billion (each transaction with deal value of greater than $2 billion) recorded in 2012. However, the number of deals registered a decrease of 11% to 1,099 in 2012 from 1,230 in 2011.
CITIC Group’s agreement to acquire 10% stake in Petropiar Oil Venture from Petroleos de Venezuela for $6 billion, Plains Exploration & Production’s acquisition of oil and gas fields in the Gulf of Mexico from BP for $5.36 billion and ONGC Videsh’s agreement to acquire 8.4% interest in Kashagan Field from ConocoPhillips for $5 billion were some of the high-value deals that led to high deal value in 2012.
North America, the major region driving the global oil and gas industry, remained at the forefront in deal activity by accounting for 58% of the deals and 53% of deal value with 646 deals worth $66.2 billion in 2012, followed by Asia-Pacific with 13% of the number of deals and 22% of deal value with 149 deals worth $27.7 billion. The US accounted for 67% of the deals and 81% of deal value with 448 deals worth $53.6 billion in 2012. The upstream sector accounted for 81% of the number of deals and 66% of deal value with 925 deals worth $85.6 billion in 2012, almost equivalent to 82% of the number of deals and 67% of deal value in 2011.
In the shale play areas, the industry recorded 248 deals worth around $32 billion in 2012, as compared to 290 deals worth $35.8 billion in 2011. Chevron, Exxon Mobil, Liberty Energy, Magnolia Petroleum, Magnum Hunter, Royal Dutch Shell, and Statoil were some of the industry majors that forayed into the shale play areas in 2012 to increase their portfolio in the high potential minimal exploratory risk-oriented unconventional shale gas plays in Canada and the United States such as Barnett, Haynesville, Bakken, Eagle Ford, Marcellus and Fayetteville shales.
The average cost ($) of production per barrel of oil equivalent per day (boepd) incurred by companies for the acquired upstream assets/companies registered an increase from $80,461.7 per boe of daily production in 2011 to $87,332.3 per boe of daily production in 2012. The average deal implied value for 1P increased from $19.2 in 2011 to $19.6 in 2012, and the average implied valued for 2P increased from $13.5 in 2011 to $13.6 in 2012.
New Investments In Oil and Gas Industry Increased In 2012
Investments in oil and gas companies, including financing through equity offerings, debt offerings, private equity and venture financing, registered an increase in the number of deals and deal value with 1,698 deals worth $400.6 billion in 2012, as compared to 1,599 deals worth $276.8 billion in 2011. The increase in the number of deals and deal value was due to increased activity in the debt offerings market, which was the most promising segment in the oil and gas industry.
The upstream sector registered an increase of 49% in total investment with $222.5 billion in 2012, as compared to $149.6 billion in 2011. The equipment and services sector registered improvement and was able to attract much investment in 2012. The sector registered an increase of 18% in the number of deals and 37% in deal value with 349 deals worth $82.2 billion in 2012, as compared to 295 deals worth $60.1 billion in 2011.
Region-wise, investments in North America increased substantially from $151.5 billion in 2011 to $203.7 billion in 2012. Europe and Asia-Pacific also reported similar trend with investments increasing from $72.3 billion and $21.6 billion in 2011 to $115.5 billion and $52.8 billion in 2012, indicating an increase of 60% and 145% respectively.
Issuance Of Debt Securities Surged In 2012
Debt offerings, including secondary offerings and private debt placements, registered an increase of 34% in the number of deals and 65% in deal value with 560 deals worth $300.9 billion in 2012, as compared to 417 deals worth $182.9 billion in 2011. Capital raising, through debt offerings by companies in North America, registered an increase in the number of deals and deal value with 322 deals worth $127.6 billion in 2012, as compared to 253 deals worth $92.5 billion in 2011. Capital raising by companies in Europe also increased from 93 deals worth $50.9 billion in 2011 to 133 deals worth $105.6 billion in 2012.
Global capital raising by oil and gas companies, through equity offerings, including initial public offerings (IPO), secondary offerings, and private investment in public equities (PIPEs), the number of deals declined, while deal values remained almost flat in 2012. There were 882 deals worth $70 billion in 2012, as compared to 990 deals worth $70.2 billion in 2011. IPO deals recorded a decrease of 50% in deal value with $9.5 billion in 2012, as compared to $19 billion in 2011. The large difference in deal value was mainly due to Glencore International’s IPO for $10 billion in 2011. The number of deals also registered a decrease of 25% with 39 deals in 2012, as compared to 52 deals in 2011. PIPE segment remained dominant with 546 deals in 2012 (down from 627 in 2011), followed by secondary offerings with 297 deals (down from 311 in 2011). PIPE segment registered an increase of 15% in deal value with $19.4 billion in 2012, as compared to $16.9 billion in 2011.
Increase In Private Equity/Venture Capital (PE/VC) Investments In 2012
The PE/VC market in the oil and gas industry registered a substantial increase in investments from $23.7 billion in 2011 to $29.7 billion in 2012. The number of deals also increased from 192 deals in 2011 to 256 deals in 2012. North America was the major focus market for PE/VC investors with $22.3 billion investments in the oil and gas industry in 2012. Major deals in 2012 include Apollo Global Management and Riverstone Consortium’s acquisition of EP Energy from El Paso for $7.2 billion; Icahn Partners’s acquisition of 67% stake in CVR Energy for $2 billion; and Global Infrastructure Partners’s acquisition of the remaining 46% joint venture stake in Chesapeake Midstream Partners from Chesapeake Energy for $2 billion.
Riverstone Holdings LLC topped the PE/VC rankings by participating in seven financing deals worth $9.1 billion in 2012. White Deer Energy L.P. was ranked second with seven deals worth $1.5 billion in the same period.
Increased Deal Activity In Europe And Asia-Pacific In 2012
Europe recorded a considerable increase of 58% in deal value with $224.3 billion in 2012, as compared to 575 deals worth $142 billion in 2011. Europe registered some of the high value deals that changed the deal value dynamics, including Rosneft’s agreement to acquire TNK-BP in two separate transactions, with 50% stake from AAR Consortium for $28 billion and another 50% stake from BP for $26.8 billion; and BP’s agreement to acquire 5.7% stake in Rosneft from Rosneftegaz for $4.8 billion.
Asia Pacific reported recorded an increase of 17% in the number of deals and 90% in deal value with 605 deals worth $94.4 billion in 2012, as compared to 516 deals worth $49.6 billion in 2011. Asset transactions were the major contributors, registering an increase of 35% in the number of deals and 160% in deal value with 149 deals worth $27.7 billion in 2012, as compared to 110 deals worth $10.7 billion in 2011.
North America, which reported the majority of deal activity, accounted for 51% of deal value with $386.8 billion in 2012, as compared to $338.9 billion in 2011. National oil companies and industry majors strengthened their foothold in the North American oil and gas market to secure energy supply and increase their reserves, and obtain stakes in high potential unconventional gas resources, which have minimal exploratory risks.
