For Release 12:00 pm CST
May 5, 2010
$48 billion in Oil and Gas Deals Announced First Quarter 2010
Houston — May 5, 2010 — PLS Inc. (“PLS”) in conjunction with its
international partner, Derrick Petroleum Services (“Derrick”), reports that global
M&A activity for the 1st Quarter 2010 totaled $47.7 billion in 157 separate
transactions, the second highest dollar volume in the last two years.
According to Richard Mason, Director of Research at PLS, “Capital
requirements needed to develop sizeable property packages long term plays a
significant role on oil and gas transactions announced during the 1st Quarter, 2010.
The trend is providing buyers access to promising plays globally while sellers have
opportunities to monetize future assets for cash or join with partners to defray
development costs.”
Deal flow remains robust following a trend that began in late summer 2009
with the anticipation of a global economic recovery. Continuing interest in
transactions suggests a market featuring attractive assets at reasonable prices in the
wake of strong crude oil performance. Oil-biased deals represented 58% of dollar
volume globally while asset deals increased dramatically to 65% of total deal value
and corporate deals accounting for the remaining 35%. This stands in contrast to
the sharp bias during 2009 towards corporate transactions, which represented 70%
of deal value. The share of corporate transactions in 2007 and 2008 was very
similar to that in Q1 2010.
Regionally, North America led the world in oil and gas transactions (see
Table 1) with total deal volume of $23.8 billion, or 50% of transactions by dollar
volume. The United States and Canada accounted for 116 of the 157 deals reported
for the quarter, or 74% of all transactions. (See Table 1).
In dollar value, North America was followed by the former Soviet Union ($9.7
billion), Africa ($7.02 billion), South America ($3.5 billion) and Australia and
Oceania ($3.4 billion).
One new wrinkle in Q1 2010 involved continued global expansion among
Chinese national oil companies (NOCs) that increased their presence into
international markets through joint venture arrangements. These include Chinese
National Offshore Oil Company’s (CNOOC) $3.1 billion JV with Bridas Energy for its
South American assets, including a 40% interest in Pan American Energy LLC (BP
Plc owns the remaining 60% interest). CNOOC, together with Total, is also in the
running for a stake in Tullow’s massive discoveries in Uganda.
Elsewhere, PetroChina teamed up with Royal Dutch Shell to acquire
Australia’s Arrow Energy for $3.2 billion. PetroChina is expected to play a key role in
tying up customers for Arrow Energy’s coalbed methane gas to LNG projects.
The BP/Devon Energy Corporation $7 billion transaction led all deals
globally as Devon divested its remaining deepwater Gulf of Mexico holdings as well
as its 5.6% share in the BP-operated Azeri-Chirag-Gunashli (ACG) Caspian Sea
project in Azerbaijan. BP expanded its position in Brazil’s deepwater play. BP now
has a commanding acreage position in the Gulf of Mexico’s emerging Lower Tertiary
play.
Table 1
Global Oil and Gas M&A Deals – First Quarter 2010
Continent
Country
United States
Canada
North America
Sub
Argentina
Peru
Trinidad and Tobago
South America
Sub
Poland
United Kingdom
Europe
Sub
Australia
New Zealand
Australia
Sub
Algeria
Angola
Egypt
Kenya
Liberia
Tunisia
Uganda
Africa
Sub
Indonesia
Israel
Kazakhstan
Mongolia
Pakistan
Philippines
Russia
Ukraine
Vietnam
Asia
Sub
Total
Total
Total
Total
Total
Total
TOTAL
Note:
Source:
Deal
Number
Value
of
(US$ MM)
Deals
$19,114.3
$4,653.4
$23,767.7
$3,100.0
$7.8
$419.2
$3,527.0
$42.8
$34.3
$77.1
$3,394.6
$15.0
$3,409.6
$66.1
$2,457.0
$49.3
$2.4
$434.6
$14.7
$4,000.0
$7,024.0
$187.8
$1.2
$24.0
$0.2
$3.2
$11.2
$9,640.0
$0.8
$2.3
$9,870.7
64
52
116
1
1
3
5
2
3
5
8
1
9
2
1
2
1
1
2
2
11
2
1
1
1
1
1
2
1
1
11
$47,676.1
157
Includes all Global Deals with Deal Value Disclosed
PLS, Inc./Derrick Global M&A Database
By commodity type, oil accounted for $26.2 billion of transaction volume, or
55% of deal value during the quarter, while natural gas oriented transactions fell
just shy of $14 billion, or 29% of deals. Deals that involved a mixed commodity
base, generated $6 billion in volume, while transactions related to oil sands reached
$1.6 billion during the quarter.
Ten deals topped $1 billion globally during the quarter, the same number
that occurred in Q4 2009. Both the U.S. and Africa witnessed three deals of $1
billion or greater, while corporate asset sales in Russia accounted for two multibillion deals. Argentina and Australia each hosted transactions above $3 billion
during Q1 2010.
“Joint venture arrangements are growing in volume and size globally, further
illustrating how oil and gas companies are addressing the capital challenges facing
industry,” according to Mason.
U.S.A.—1st Quarter 2010 E&P Mergers and Acquisitions continue to increase
In the United States, deal activity rose 7% to 64 announced transactions
versus 60 in Q4 2009, and just 21 in Q1 2009, while total dollar volume fell 64%
sequentially to $19.1 billion. Of course, the Q4 2009 totals ($53.3 billion) were
buttressed by the $41.0 billion ExxonMobil/XTO Energy transaction. Backing out
ExxonMobil/XTO the U.S. has seen quarterly transaction values of $19.1 billion (Q1
2010, 64 deals); $12.4 billion (Q4 2009, less XTO, 59 deals); $4.3 billion (Q3 2009,
46 deals); $3.9 billion (Q2 2009, 46 deals); $405 million (Q1 2009, 21 deals) and
$5.7 billion (Q4 2008, 32 deals).
The U.S. witnessed 18 conventional production deals totaling $7.1 billion
during the quarter compared to 16 deals and $7.5 billion in value during Q4 2009.
Valuations rose 6.4% during the quarter to $88,438 per BOE/D versus the prior
quarter while the price for proved reserves dropped 19% to $12.87 per BOE.
Despite softening natural gas prices natural gas-oriented transactions
represented 64% of volume by dollar value with oil-oriented deals at 21%,
(assuming $2 billion as the value of the GOM assets sold by Devon to BP). Breaking
it down further, natural gas was even the dominant commodity driver in Q1 2010
conventional production transactions, accounting for 77% of deal value.
CONSOL Energy’s $3.5 billion acquisition of Dominion’s remaining oil and gas
producing assets topped all U.S. deals during the quarter as Appalachia’s largest coal
company sought to diversify its commodity base. CONSOL followed that
announcement a week later by offering to buy the 17% of CNX Gas that it did not
already own for $985 million.
A new angle surfaced during the quarter when two E&P Master Limited
Partnerships (MLPs) announced transactions of producing assets including Linn
Energy’s purchase of HighMount E&P’s Antrim Shale properties in Michigan and EV
Energy Partner’s acquisition of Appalachian conventional gas assets from Range
Resources. The transactions were valued at $330 million each. Separately, Linn
Energy acquired $305 million in Permian Basin producing properties during the
quarter. The E&P MLP sector has become more active in acquiring long-lived mature
properties during the last six months. Range Resources sale of non-core
Appalachian properties will help the company finance exploitation of its Marcellus
holdings.
Like Range, Petrohawk and EOG’s recent announcement to market over a
billion dollars in non-core assets this year are additional examples that the leading
U.S. unconventional players should keep the deal pipeline full for 2010 as they look
to fund unconventional drilling through asset sales.
In addition to ample deal supply, PLS anticipates that oil transactions should
continue to grow in influence this year as buyers look to adjust their portfolio for
more profitable oil opportunities. The second quarter of 2010 has already seen
SandRidge’s $1.6 billion acquisition of Arena Resources, CCMP Capital’s $345
million investment in Chaparral, Linn’s $305 million acquisition of Permian assets
and Quantum Resource Management’s $900 million acquisition of Denbury’s noncore gas and oil properties purchased from Encore Acquisition Co. late last year.
Table 2
United States Oil & Gas M&A Deals - First Quarter 2010
# of Deals
Deal Value (US$MM)
Note:
Source:
Q1
2009
21
$405
Q2
2009
46
$3,876
Q3
2009
46
$4,262
Includes all U.S. deals with Deal Value disclosed
PLS, Inc./Derrick Global M&A Database
Q4
2009
60
$52,457
Q1
2010
64
$19,114
Table 3
United States Valuation Metrics - First Quarter 2010
Conventional Production Deals Only
Region
Mid-Continent
Permian
Rockies
Eastern
GC Onshore
Multiple
Total/Weighted Average
Note:
Source:
Deal
Count
Deal
Value
(US$ MM)
Proved
Reserves
($/BOE)
Production
Value
($/Daily BOE)
R/P
Years
Oil
(%)
5
4
4
2
2
1
$1,385
$705
$1,144
$3,805
$14
$11
$15.26
$14.16
$9.92
$13.23
$6.41
$18.36
$73,453
$79,841
$72,727
$116,645
$23,500
$80,000
13.2
15.5
20.1
24.2
10.0
11.9
46%
46%
27%
4%
32%
NA
18
$7,064
$12.87
$88,438
18.8
23%
Includes U.S. Conventional Deals Only with adequate Deal Disclosure for M&A analytics.
PLS, Inc./Derrick Global M&A Database
Joint venture arrangements in unconventional plays figured prominently in
U.S. deal volume, led by the Anadarko Petroleum Corporation and Mitsui E&P USA
LLC $1.4 billion joint venture in the Marcellus Shale. The transaction provides Mitsui
a 32.5% stake in Anadarko’s Marcellus assets. The deal was valued at more than
$14,000 per acre. Similarly, Statoil expanded their Chesapeake joint venture
arrangement in the Marcellus through another $253 million investment, while BP
broadened its participation in the Eagle Ford Shale with a $160 million JV with
Lewis Energy Group.
During the 1st Quarter 2010, PLS and Derrick tallied 19 transactions
representing $4.1 billion in volume in major U.S. unconventional oil and gas plays.
The Marcellus Shale attracted the most buyer interest with four transactions
Table 4
United States Unconventional Deals - First Quarter 2010
Area
Bakken Shale
Coalbed Methane
Eagle Ford Shale
Haynesville Shale
Marcellus Shale
Multiple
Other
TOTAL
Deal
Value
(US$ MM)
Number
of
Deals
$3
$1,059
$587
$42
$2,033
$15
$342
1
4
3
3
4
1
3
$4,081
19
Note:
Unconventional Deals Only
Source: PLS, Inc./Derrick Global M&A Database
totaling $2.0 billion in value for the period, including the Anadarko/Mitsui JV.
Coalbed methane, much of it in Appalachia generated $1.1 billion in value in four
separate unconventional transactions.
Acreage accounted for six of the 19 unconventional deals during the quarter,
with five additional joint venture deals. Property-related transactions represented
five deals while three involved corporate acquisitions.
PLS sees the Eagle Ford play possibly passing the Marcellus and Haynesville
for market activity through the rest of the year as companies jockey for position in
the hottest unconventional play in the U.S. including opportunities in the “oil
window”. As an example, Talisman announced earlier this morning that it would
acquire Common Resources Eagle Ford assets for $360 million. This number
calculates out to record metrics of $9,700 per acre and $30,000 per flowing MCFe.
“The market doesn’t seem to have reservations about $4.00 gas”, said Ronyld
W Wise, Managing Director of PLS Inc.,
About the companies---PLS, Inc. and Derrick Petroleum services are partners in providing U.S.,
Canadian and International clients leading Global and U.S. M&A and E&P databases
and services. These databases are maintained 24/7 by a team of analysts and are
accessible via the web to clients.
PLS, Inc. is a leading industry research and transactions firm based in
Houston, Texas. PLS, Inc. provides clients with timely research, transaction, and
financial advisory services.
Derrick Petroleum Services is an independent oil and gas research and
consulting firm. Derrick’s databases have worldwide coverage, with special
emphasis on emerging plays and international transactions.
For More Information:
Contact Richard Mason at PLS, Inc. at 806-438-1607 and/or 713-650-1212 for
further inquiries or to access and subscribe to the M&A database.
Additional Media Contact:
Richard Mason, Director, Research, PLS Inc., 713-650-1212, mason@plsx.com
Ronyld W Wise, Managing Director, PLS Inc., 713-658-9421, rwise@plsx.com