After two consecutive years of decline, global upstream merger and acquisition (M&A) transaction value increased 40 percent in 2009 to just under $150 billion, according to the annual Global Upstream M&A Review issued by energy research firm IHS Herold, which is part of IHS. Deals in North America accounted for a record high two-thirds of the $150 billion.
Outlook for 2010
According to the study, IHS Herold expects that relatively robust crude prices and a continued thawing of the credit markets will positively affect global deal activity in 2010, with more than $20 billion assets on the market and a pool of well-capitalized international buyers seeking to secure supply and grow reserves.
Regional Transaction Activity in 2009
Major oil companies and European IOCs invested heavily in U.S. onshore shale gas through both asset and corporate acquisitions in 2009, lifting the percentage of global spending for the U.S. to more than 40 percent of worldwide transaction value. U.S. deal count tumbled to a 10-year-low, primarily due to weak gas prices and tight equity, and credit markets for the small and mid-size exploration and production companies that traditionally fuel market liquidity.
In Canada, deal activity was sluggish for the second year in a row. The Suncor/Petro-Canada merger comprised more than half of 2009 Canadian transaction value. Asian NOCs were buyers in two of the largest deals. Implied reserve values for oil weighted transactions and the percentage of transacted crude reserves increased, while pricing for gas-weighted assets fell sharply.
The number of transactions in Europe dipped slightly from the record total in 2008, but was the second highest in 10 years. European utilities and diversified energy companies continued to be active buyers in the North Sea, targeting regional gas supply.
Africa and Middle East
Transaction value for Africa and the Middle East almost doubled year over year to a record high in 2009 as intense competition continued between NOCs and international integrated majors for the region’s world-class oil discoveries. Host governments in Libya and Angola pre-empted high-profile corporate bids and asset bids by Chinese NOCs.
Asia-Pacific accounted for less than five percent of worldwide deal value in 2009, down sharply from 17 percent in 2008. Coal-seam gas transactions accounted for nearly $1.5 billion, or some 30 percent, of total transaction value in the region.
Colombia and Argentina accounted for more than half the regional deals last year with substantial investment also focused in Peru. Deal count soared to a 10-year high despite a slight drop in total transaction value.
Former Soviet Union
Acquisition spending in the former Soviet Union accounted for almost 15 percent of worldwide deal value in 2009. Host government NOCs were the acquirers in half of the 10 largest deals while Asian NOCs made significant investments. Deal count rebounded from the previous year's five-year low, while asset transaction value doubled year-over-year to almost $13 billion.
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