Oil & Gas M&A Deal Value Up in 2018

Shailaja A. Lakshmi
Friday, February 15, 2019

Global oil and gas total deal value increased by US$ 79.7b during 2018 to reach US$426.8b, despite a decrease of 18% in deal volume, said EY Global oil and gas transaction review 2018.

It said that while the first two quarters of 2018 saw greater deal appetite aided by rising oil prices, caution returned in the second half of the year due to a decline in the oil price to 2015 levels.

Looking ahead, the 2019 mergers and acquisitions (M&A) environment will likely be shaped by lower commodity prices, uncertain political climate and energy transition strategies, the review said.

Andy Brogan, EY Global Oil & Gas Transaction Advisory Services Leader, says: “The deal environment for the past three years has reflected adjustment to a perceived new normal, as the energy transition continues to weigh heavily on companies’ portfolio strategies."

He added: "Risk sensitivity and a continued focus on portfolio optimization has shifted capital from upstream to mid and downstream in 2018. With a retreat in commodity prices, we expect companies to continue to show restraint in how they spend their cash. However, we anticipate that other sources of funding will underpin an increase in M&A activity during 2019.”

Upstream deal value declined from US$164.8b to US$130.3b during 2018, while deal counts declined by 26%. Other factors impacting M&A activity last year included a more disciplined approach to capital deployment, with upstream players focusing on their highest productivity capex-related investments and reducing debt.

Despite expectations of  the transition from oil to gas, this did not seem to translate into gas specific transactions activity; indeed the proportion of these deals declined from 21% to 13% over the course of the year.

Last year marked a five year high for midstream transactions (US$193.1b), representing the largest total deal value (45%) for oil and gas transactions during that period. Corporate simplification and restructuring drove almost 75% ($140b) of the total deal value, as companies restructured and consolidated their affiliates in response to changes in US tax regulations.

Companies also continued their focus on lowering capital costs, increasing capital access and improving balance sheets to position for infrastructure expansion.

Categories: Energy Oil Gas Research

Related Stories

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

Baker Hughes, Petronas Team Up for Asia-Pacific Energy Resilience

EnQuest Acquires Harbour Energy’s Vietnamese Assets

Woodside Finds South Korean Partners to Advance LNG Value Chain

Valeura Makes Progress with Multi-Well Drilling Campaign in Gulf of Thailand

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Current News

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

China Starts Production at Major Oil Field in Bohai Sea

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

China Rolls Out 17MW Floating Wind Turbine Prototype

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

CNOOC Finds Oil and Gas in South China Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com