North America's $15.9 billion in oil and natural gas merger and acquisition activity led the global markets during the third quarter with a 38% share, but overall U.S. activity and deal values declined year/year, according to PLS Inc. and Derrick Petroleum Services.
The total value of global transactions increased nearly 60% from the second quarter, according to Houston-based PLS, a research and transaction firm, and Derrick, its international partner. National oil companies (NOC) and private equity (PE) were the most active buyers, with China snapping up one-quarter of all the transactions during the quarter. The firms only provide data if deal values are disclosed.
The strong North American deal market reflected the large amount of capital needed for resource play development, PLS noted.
However, North American deal values were down 42% from April through June and off from an average 56% share since 2007. U.S. deal activity declined year/year to 68 transactions from 74. Deal values also were down at $12.2 billion from $19.9 billion. The latest transactions also fell 24% from 2Q2013.
Current benchmark multiples for U.S. upstream valuations for proved developed producing-weighted conventional assets are down slightly for oil and up slightly for natural gas, according to PLS.
"Using our proprietary screen, oil-weighted asset multiples today are $110,000 per boe/d, or $18.75/proved boe, with an average reserves/production (R/P) of 16 years, versus last quarter's $120,000 per boe/d or $22.50/proved boe, and average R/P of 16 years," according to PLS.
"For gas, the multiples are $5,900/Mcfe/d and $1.50/proved Mcfe, with an average R/P of 11 years, versus last quarter's $5,800 per Mcfe/d and $1.75/proved Mcfe with an average R/P of 10 years."
Sellers lately are being motivated to divest conventional, legacy producing properties and to sell off stakes in some of their world-class global discoveries to help fund, among other things, North America resource plays, according to PLS Managing Director Brian Lipsky.
Apache Corp. is a good example, he said.
During 3Q2013, Apache sold a total of $7.2 billion of assets through a series of rapid transactions, which far surpassed the company's stated initial goal of $4 billion. The operator is growing production rapidly in the Permian Basin and Midcontinent and has been selling legacy properties to pay down debt and finance more U.S. onshore spending.
In July its legacy Gulf of Mexico (GOM) Shelf portfolio was sold to Fieldwood Energy LLC, backed by PE firm Riverstone, for $3.75 billion (see Daily GPI,July 19). A month later Apache sold conventional assets in Canada to Ember Resources for $214 million (see Daily GPI, Aug. 16). One-third of its Egyptian holdings were sold to Sinopec for $3.1 billion (see Daily GPI, Sept. 3). Two more Canada properties also were divested for $112 million.
The Fieldwood deal "is noteworthy on several fronts," said Lipsky. "First, it immediately vaults Fieldwood into operating the largest GOM shelf asset base with current production of 95,000 boe/d. Second, the transaction amplifies the role of private equity in today's markets.
"Fieldwood is backed by PE firm Riverstone and according to Fieldwood, the deal represents Riverstone's largest single investment. Lastly, the deal represents a noteworthy change for Apache which, over a span of 30 years, had operated in the GOM shelf to build the company into where it is today.
"Now Apache's growth is in large part coming from U.S. onshore resource plays. This is a trend in the U.S. markets which is not unique to Apache."
Other continuing themes in the United States during the latest period were more activity in oil and liquids onshore plays.
"Outside of the Gulf of Mexico, the most active area in 3Q2013 was the Bakken Shale. Since May 2007, there have been 249 deals totaling $24 billion, with 14 deals for $2.0 billion in 3Q2013."
The largest transaction in the latest quarter was Oasis Petroleum's $1.45 billion purchase of privately held Roda Drilling and Zenoco Inc. Oasis also completed three other regional purchases for $65 million. In addition, the Eagle Ford Shale attracted nine transactions worth a total of $1.2 billion.
Globally, from July through September there were 150 separate transactions worth $41.8 billion, down 19% from a year ago when 155 transactions worth $51.3 billion were announced. The total amount of deals was lower than in 2Q2013, when there were 168 transactions, but the total value was lower at $26.4 billion.
For comparison, the 3Q2013 total is off a nominal 3% from the quarterly average recorded since 2007. For deal counts, the tally of 150 deals is down a nominal 4% from quarterly averages since 2007.
"This year, the oil and gas deal market started slow after an unusually busy 4Q2012, which saw 238 deals for $138 billion," said Lidsky (see Daily GPI,Jan. 8). "However, both the pace and dollar amount of deals has consistently increased throughout this year culminating in a 3Q2013 total of $42 billion in 150 deals -- a level of activity on par with quarterly averages since 2007. Furthermore, looking forward we expect the final quarter of 2013 to trend above average for deal activity," with a high inventory level and a healthy interest from NOCs and PE.
The Former Soviet Union followed North America as the most active region for deals during 3Q2013 garnering 28% of the total, and Africa was next with 16%. Noteworthy regional rebounds also occurred in Europe and Canada, with Canada deals in 3Q2013 totaling $3.7 billion, compared to a total of $2.9 billion in the first six months of the year. The pace still lags the $7.6 billion average in deals announced quarterly by Canada since 2007.
According to PLS analytics, as of Oct. 1, the growth in inventory of deals in play on Oct. 1 had stabilized and totaled $135 billion, up from $133 billion on July 1. The tally had stood at $116 billion on March 31 and $85 billion on Dec. 31, 2012.
Announced deals in play worth more than $1 billion include Royal Dutch Shell plc's decision to divest some onshore North American properties (see Daily GPI, Aug. 2). In September Shell began marketing assets in the Eagle Ford and Mississippian Lime. Also for sale are some assets in Western Canada by Imperial Oil.
"The United States has the largest inventory of deals in play with an estimated $33 billion (down from last quarter's $37 billion), followed by Canada with $25 billion (up from $17 billion), Russia with $15 billion (same as last quarter) and Brazil with $13 billion (down from $15 billion)," PLS noted.
North America's $15.9 billion in oil and natural gas merger and acquisition activity led the global markets during the third quarter with a 38% share, but overall U.S. activity and deal values declined year/year, according to PLS Inc. and Derrick Petroleum Services.
The total value of global transactions increased nearly 60% from the second quarter, according to Houston-based PLS, a research and transaction firm, and Derrick, its international partner. National oil companies (NOC) and private equity (PE) were the most active buyers, with China snapping up one-quarter of all the transactions during the quarter. The firms only provide data if deal values are disclosed.
The strong North American deal market reflected the large amount of capital needed for resource play development, PLS noted.
However, North American deal values were down 42% from April through June and off from an average 56% share since 2007. U.S. deal activity declined year/year to 68 transactions from 74. Deal values also were down at $12.2 billion from $19.9 billion. The latest transactions also fell 24% from 2Q2013.
Current benchmark multiples for U.S. upstream valuations for proved developed producing-weighted conventional assets are down slightly for oil and up slightly for natural gas, according to PLS.
"Using our proprietary screen, oil-weighted asset multiples today are $110,000 per boe/d, or $18.75/proved boe, with an average reserves/production (R/P) of 16 years, versus last quarter's $120,000 per boe/d or $22.50/proved boe, and average R/P of 16 years," according to PLS.
"For gas, the multiples are $5,900/Mcfe/d and $1.50/proved Mcfe, with an average R/P of 11 years, versus last quarter's $5,800 per Mcfe/d and $1.75/proved Mcfe with an average R/P of 10 years."
Sellers lately are being motivated to divest conventional, legacy producing properties and to sell off stakes in some of their world-class global discoveries to help fund, among other things, North America resource plays, according to PLS Managing Director Brian Lipsky.
Apache Corp. is a good example, he said.
During 3Q2013, Apache sold a total of $7.2 billion of assets through a series of rapid transactions, which far surpassed the company's stated initial goal of $4 billion. The operator is growing production rapidly in the Permian Basin and Midcontinent and has been selling legacy properties to pay down debt and finance more U.S. onshore spending.
In July its legacy Gulf of Mexico (GOM) Shelf portfolio was sold to Fieldwood Energy LLC, backed by PE firm Riverstone, for $3.75 billion (see Daily GPI,July 19). A month later Apache sold conventional assets in Canada to Ember Resources for $214 million (see Daily GPI, Aug. 16). One-third of its Egyptian holdings were sold to Sinopec for $3.1 billion (see Daily GPI, Sept. 3). Two more Canada properties also were divested for $112 million.
The Fieldwood deal "is noteworthy on several fronts," said Lipsky. "First, it immediately vaults Fieldwood into operating the largest GOM shelf asset base with current production of 95,000 boe/d. Second, the transaction amplifies the role of private equity in today's markets.
"Fieldwood is backed by PE firm Riverstone and according to Fieldwood, the deal represents Riverstone's largest single investment. Lastly, the deal represents a noteworthy change for Apache which, over a span of 30 years, had operated in the GOM shelf to build the company into where it is today.
"Now Apache's growth is in large part coming from U.S. onshore resource plays. This is a trend in the U.S. markets which is not unique to Apache."
Other continuing themes in the United States during the latest period were more activity in oil and liquids onshore plays.
"Outside of the Gulf of Mexico, the most active area in 3Q2013 was the Bakken Shale. Since May 2007, there have been 249 deals totaling $24 billion, with 14 deals for $2.0 billion in 3Q2013."
The largest transaction in the latest quarter was Oasis Petroleum's $1.45 billion purchase of privately held Roda Drilling and Zenoco Inc. Oasis also completed three other regional purchases for $65 million. In addition, the Eagle Ford Shale attracted nine transactions worth a total of $1.2 billion.
Globally, from July through September there were 150 separate transactions worth $41.8 billion, down 19% from a year ago when 155 transactions worth $51.3 billion were announced. The total amount of deals was lower than in 2Q2013, when there were 168 transactions, but the total value was lower at $26.4 billion.
For comparison, the 3Q2013 total is off a nominal 3% from the quarterly average recorded since 2007. For deal counts, the tally of 150 deals is down a nominal 4% from quarterly averages since 2007.
"This year, the oil and gas deal market started slow after an unusually busy 4Q2012, which saw 238 deals for $138 billion," said Lidsky (see Daily GPI,Jan. 8). "However, both the pace and dollar amount of deals has consistently increased throughout this year culminating in a 3Q2013 total of $42 billion in 150 deals -- a level of activity on par with quarterly averages since 2007. Furthermore, looking forward we expect the final quarter of 2013 to trend above average for deal activity," with a high inventory level and a healthy interest from NOCs and PE.
The Former Soviet Union followed North America as the most active region for deals during 3Q2013 garnering 28% of the total, and Africa was next with 16%. Noteworthy regional rebounds also occurred in Europe and Canada, with Canada deals in 3Q2013 totaling $3.7 billion, compared to a total of $2.9 billion in the first six months of the year. The pace still lags the $7.6 billion average in deals announced quarterly by Canada since 2007.
According to PLS analytics, as of Oct. 1, the growth in inventory of deals in play on Oct. 1 had stabilized and totaled $135 billion, up from $133 billion on July 1. The tally had stood at $116 billion on March 31 and $85 billion on Dec. 31, 2012.
Announced deals in play worth more than $1 billion include Royal Dutch Shell plc's decision to divest some onshore North American properties (see Daily GPI, Aug. 2). In September Shell began marketing assets in the Eagle Ford and Mississippian Lime. Also for sale are some assets in Western Canada by Imperial Oil.
"The United States has the largest inventory of deals in play with an estimated $33 billion (down from last quarter's $37 billion), followed by Canada with $25 billion (up from $17 billion), Russia with $15 billion (same as last quarter) and Brazil with $13 billion (down from $15 billion)," PLS noted.
