Oil & Gas M&A Deal Volume Reaches Highest Level in 10 Years
Merger and acquisition activity in the U.S. oil and gas industry hit a ten-year high during Q4/12 with 75 deals, according to PwC US.
A number of factors drove this activity, including private equity (PE) interest, foreign buyers, shale plays and companies looking to get deals done before the end of the year with the looming fiscal cliff and proposed tax changes. In fact, that flurry of fourth quarter activity pushed overall deal volume in 2012 to a ten-year high at 204 transactions (for deals valued at over $50 million), representing $146.2 billion – the second highest total deal value in ten years.
During the final three months of 2012, total deal value reached $56.2 billion, marking the second highest level seen in ten years (behind the $79.1 billion total deal value seen during the fourth quarter of 2011).
“M&A activity in the U.S. oil and gas sector was extremely robust in 2012, with the vast majority of that activity happening in the final three months of the year as many deals got pulled forward due to the uncertainty surrounding the fiscal cliff,” said Rick Roberge, principal in PwC’s energy M&A practice. “This past year was a watershed moment for the industry, with private equity involvement reaching an all-time high, shale deal volume at a two-year high during the fourth quarter, and a jump in asset transactions as companies have shifted their focus to adding more profitable liquid rich shale plays to their portfolios. We expect to see a slight pause in M&A during the first part of 2013 as companies focus on the recent wave of deals announced, but believe 2013 will be another banner year for deals as the U.S. oil and gas industry is ripe for continued consolidation. In fact, our recent PwC Global CEO Survey found that energy CEOs are among the most confident on growth prospects for this year than any other industry.”
PE deal activity in the oil and gas industry marked an all-time high in 2012 with 34 transactions (which represented $28.4 billion). In the fourth quarter of 2012, there were 11 financial sponsor-backed deals worth $6.9 billion, a slight drop from the 13 PE deals in the fourth quarter of 2011 that totaled $13.6 billion. Additionally, there were 170 strategic deals in all of 2012 that contributed $117.8 billion, compared to 163 strategic deals in 2011 with a total deal value of $136.5 billion. During the fourth quarter of 2012, there were 64 strategic deals, a 64 percent increase from the 39 deals during the same time period last year. Total deal value for strategics was $49.2 billion during the last three months of 2012, a decline from the $65.5 billion in the fourth quarter of 2011.
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