The article below highlights the M&A activity that we’ve been reporting in our newsletter Facts & Rumors. The price of oil is $40 which is caused by the glut on the market. We may have slowed production in the U.S., but Iran has filled that vacuum.
The rig count has been rising the last few weeks which also may impact the price of oil. Many analysts believe the price may go as low as $35 which will put more pressure on E&P Company. Consequently, the PwC report seems to reading the market. Again, we’ll be monitoring the M&A activity and we’ll keep abreast of what is happening.
Second-quarter merger and acquisition (M&A) activity in the U.S. oil and gas industry rose from a year ago, led by a 94% jump in upstream deals – 23 of 50 transactions were shale-related – PwC reports.
Companies announced 50 total oil and gas deals (each valued at more than $50 million) totaling $19.6 billion, up 6% and 50%, respectively, from the year-ago quarter, according to the tax/consulting giant.
The upstream segment contributed to the majority of the deals, 35 of the 50 second-quarter transactions, worth $15.3 billion, Kallanish Energy finds.
The most active $50+ million plays for M&A during the second quarter were the Permian Basin (six deals worth $2.1 billion) and Marcellus Shale play (four deals worth $1.3 billion).
“Stabilizing commodity prices and cautious optimism that a recovery is within sight resulted in narrowing of the bid-ask spread in the upstream space, which led to the higher deal volume that many had been anticipating for some time,” said Doug Meier, U.S. Oil & Gas Sector Deals leader at PwC.
“Leveraged producers were able to divest assets to raise cash for debt pay downs, while other E&P companies were able to sell off noncore assets to raise proceeds to fund investment programs.”
From April through June, there was only one $1+ billion megadeal in the second quarter, PwC found, Range Resources $4.4 billion acquisition of Memorial Resource Development.
Financial investors accounted for 13 transactions worth $4.2 billion, a 61% decrease in total value year-over-year, with equity commitments from private investors accounting for six of the 13 financial deals, a $2 billion tranche.