US Oil and gas deals insights Q1 2017
Overview
The first quarter of 2017 continued the investor enthusiasm for Oil and Gas M&A, setting a record high deal value for a first quarter. Pleased by a pro-energy policy agenda taking shape, reassured by the relative steadiness of the price of oil, and encouraged by advances in shale technology, investors entered 2017 with renewed optimism, resulting in a record $73.04 billion in announced deals. This represented a stunning 160% increase in deal value year over year. In addition, IPO-preparation activity increased sharply during the first quarter with an anticipated increase in IPOs in the second quarter of 2017.
In our last report, we forecast a bright first quarter ahead. After this record quarter, the question now is, will the momentum continue? Although there is still plenty of dry powder, including the capital of foreign investors who are finally beginning to return to US shale plays, we see a few signs that the tide may be starting to ebb. Commodity price declines midway through the first quarter, coupled with declining Oil and Gas equity indices have given potential buyers reasons to revisit their valuation assumptions.
Key trends/Highlights
- Oil and gas deal-making started 2017 on a high note, setting a record for high first quarter level deal value, fueled by a wave of mega-deals. Fifty-three deals worth $73.04 billion were announced in the first quarter-- a 160% increase in deal value year over year.
- The upstream segment remained red-hot. A total of 32 deals worth $36.60 billion were announced, a 304% increase in deal value, and a 68% increase in deal volume, year over year.
- Asset deals predominated this quarter. The tried and true axiom location, location, location rule pushed O and G companies not only to seek growth but to rationalize their holdings.
- The Permian was the most active shale basin with 20 deals, valued at $21.36 billion. This represented a record high for the basin.
Contact us
Doug Meier
US Energy Deals Leader
Tel: +1 (713) 356-5233
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