Over the last twelve months (LTM) there were 82 oil and gas deals totaling $122.9 billion, down 41% year-over-year with 80% of deal value occurring in 2H, and led by mega deals in upstream and downstream. Corporate and asset deals were roughly equal based on deal value. Upstream majors deployed both stock and cash for deals, while other sub-sectors relied on cash instead.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021. Explore national deals trends.
The oil and gas industry is recalibrating in response to an array of shifting market drivers. The prolonged decline in demand for both oil and gas production and refined products due to Covid-19 will likely continue to keep capital discipline front-and-center. This could present headwinds for deals opportunities for many companies, as other competing calls for cash will require deals to demonstrate strong prospects to deliver accretive returns more quickly than other capital investment alternatives. However, announced deals in October indicate that opportunity exists for well-capitalized E&P players to acquire quality assets, build on existing drilling inventory, and unlock corporate synergies.
We see four deal drivers which will drive 2021 energy M&A:
“Energy space will see divergent M&A trends in the upcoming period: continued consolidation in US onshore, divestitures in downstream and repositioning in midstream.”
Energy Deals Leader, PwC US