2021 could be a bumper year for upstream M&A with deals potentially reaching $10-15 billion in the Asia Pacific region, Wood Mackenzie said on Tuesday.
The estimate compares to just over $4 billion of deals in 2019 and less than $1 billion in 2020 so far, Kallanish Energy learns.
“2020 upended the upstream industry not once, or twice, but three times,” the consultancy firm said. First the oil price crash, then the coronavirus pandemic, followed by the rapid acceleration of energy transition plans from the Euro-Majors.
These developments sent “shockwaves” through the industry and created big questions about future strategies. Majors are now putting a range of non-core assets for sale as they pay more attention to the energy transition, portfolio rationalization and deleveraging stretched balance sheets.
“This sets us up for a bumper 2021 for M&A,” said research director Angus noting that price discovery will be a tricky journey. “With the Majors on one side and bargain hunters on the other, contingent payments will play a key role in deals to help bridge the gap.”
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