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Upstream M&A and raising activity deals in Q3 fall by 50 per cent, says GlobalData

44787117725 824346689e cGlobal merger and acquisitions (M&A) and raising activity in the oil and gas upstream sector totalled US$63.4bn in Q3 2019

This represented a 50 per cent decrease from the US$126.8bn in Q2 2019. By volume, the number of deals decreased by 30 per cent from 338 in Q2 to 269 in Q3, according to data and analytics company GlobalData.

A total of 90 M&A deals, with a combined value of US$13.7bn, were recorded in the conventional segment, and 36 deals, with a combined value of US$17.1bn, were recorded in the unconventional segment in Q3 2019.

Praveen Kumar Karnati, oil and gas analyst at GlobalData, commented, “Capital raising, through equity offerings witnessed a substantial decrease in deal values, recording US$1.2bn in Q3, compared with US$14.5bn in Q2. The number of equity offering deals also decreased by 17 per cent from 109 in Q2 to 90 deals in Q3.

“Capital raising, through debt offerings, registered a decrease of 17 per cent in the number of deals and a marginal increase in deal value with 43 deals, of a combined value of US$30bn, in Q3, compared with 52 deals, of a combined value of US$29.1bn, in the previous quarter.”

The data company stated that ten private equity/venture capital deals, with a combined value of US$1.4bn, were recorded in the upstream industry in Q3, compared with 13 deals, with a combined value of US$504.2m, in Q2.

The top M&A deal of Q3 was BP’s agreement to sell its entire upstream and midstream business in Alaska to Hilcorp Energy for a consideration of US$5.6bn. Following the transaction, BP will exit from Alaska oil and gas business.

The upstream assets include interests in Prudhoe Bay (26 per cent), Milne Point (50 per cent), Point Thomson (32 per cent), Liberty project (50 per cent) and non-operating interests in exploration leases in Arctic National Wildlife Refuge.

“The midstream assets include interests in Trans Alaska Pipeline System (49 per cent), Alyeska Pipeline Service Company (49 per cent), Point Thomson Export Pipeline (32 per cent) and Milne Point Pipeline (50 per cent). The other interests include Prince William Sound Oil Spill Response Corporation (25 per cent).

“BP’s net oil production from Alaska in 2019 is expected to average almost 74,000 bpd. Baker Botts is acting as legal advisor to BP and Kirkland & Ellis is acting as legal advisor to Hilcorp in the transaction. The transaction is in line with Hilcorp’s strategy of acquiring mature fields from major oil companies and slashing costs,” Karnati added.