Mergers and acquisitions activity within the global oil and gas market
Burgeoning energy demand, higher oil prices, constrained supplies of conventional hydrocarbons, the exploration of more unconventional sources, and increasingly complex geopolitics are all shaping M&A activity in the oil and gas industry.
After three years of unprecedented returns and the biggest stock buybacks in history, deal activity in the oil and gas industry is buoyant. New forces are also driving deal-making in addition to the traditional goal of reserves replacement. The resurgence of the ‘national oil companies’ (NOCs) and growing levels of private equity interest in the sector are both having a significant impact on M&A activity. Consolidation is moving forward quickly among mid-size companies and we are also seeing a boom in oilfield service deals.
O&G Deals is a new companion publication to PricewaterhouseCoopers’ well established and highly regarded Power Deals series which reviews deal activity in the electricity and gas utilities sector each year. Together, the two publications provide a comprehensive analysis of M&A activity in the energy sector as a whole.
O&G Deals reviews deal activity in the oil and gas industry. We examine both the rationale behind the overall trends and look at the key individual deals. We look both at the year under review and ahead to the future direction of deal-making in the sector.
We also highlight, in a series of deal dialogues throughout the report, some of the critical issues for companies engaging in deal activity within the sector. Drawing on our global experience as an adviser to oil and gas players, our commentary addresses all key markets in the sector.
Report Highlights
- M&A competition intensifies Read More»
Competition for deals is intensifying in the oil & gas sector with the growth of private equity players as a major force and the increasing influence of NOCs from Russia, China and India. These new forces helped push up total deal activity to US$291bn and brought new imperatives into play alongside the traditional corporate drivers of reserve replacement and portfolio balance.
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- Mid-tier and service company consolidation accelerates Read More»
Consolidation is running apace with big increases in values for mid-size deals and among service companies. 2006 saw a major 59% leap in mid-size deal numbers and a 61% in total mid-size deal values which jumped from US$36.3b in 2005 to US$58.3bn in 2006. Nearly half of these deals were among oil services companies with total service company deal values leaping 132%.
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- M&A moves along the shifting oil extraction sands Read More»
A higher price environment, the increased geopolitical risk of other key supply sources and technological advances have brought more marginal oil and gas resources into play. 2006 saw significant deal-making activity, for example, in the Canadian oil sands and for coal seam gas assets in the Rocky Mountains and Australia. These two sources alone accounted for US$14bn.
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- Gas deals move to the top Read More»
Gas deals dominated the list of the largest transactions in 2006. Six out of the eight upstream deals in the top ten deal list were predominantly gas. This was in contrast to the previous year when only two deals in the top ten of all deals and four of the top ten of upstream deals were gas dominated. Indeed, gas accounted for more half (53%) of total transacted proved reserves in 2006, a ten year high*.
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