US oil and gas deals insights: Year-end 2018

Start adding items to your reading lists:
or
Save this item to:
This item has been saved to your reading list.

Dealmakers shifted their strategies in 2018

Deal values hit record highs as midstream companies looked to simplify corporate structures, and upstream companies added producing acreage in basins with existing presence or costs.

Faced with activist shareholder demands for positive cash flow, the prospect of rising interest rates and intense competitive pressure to reduce production costs, oil and gas dealmakers shifted their strategies in 2018.

  • Out: highly leveraged investments with a delayed payoff.
  • In: positive cash flows and simpler corporate structures.
Share

Trends and highlights

  • Total deal value hit record high levels due to affiliate transactions. Excluding these deals, deal value was below the three-year average.
  • As priorities shifted from acreage and production growth to capital discipline and operating within existing cash flows, companies looked to rationalize their asset portfolios and simplify corporate structures.
  • In the upstream space, the source of the majority of the deal volume in 2018, the deals focused on building scale, augmenting presence in basins with already existing acreage, infrastructure and know-how, immediate production and cash flow increases. Many of the new acreage acquisitions were funded with cash from non-core asset divestitures.
  • In the midstream space, which generated the bulk of the total deal value, the transactions were driven by the desire to simplify and optimize corporate structures, as regulation shifts changed the attractiveness of certain corporate structures.


 

Contact us

Joe Dunleavy

EU&M Deals Leader, PwC US

Tel: +1 (713) 382 6638

Follow us