PwC: U.S. energy M&A hits eight-year high for first half of 2017

Updated 7:36 am, Thursday, July 27, 2017

Deal-making slowed from “red hot” to just “hot” in the second quarter, but the first half of 2017 still saw the U.S. energy sector’s most mergers and acquisitions activity in eight years, according to a new report from PricewaterhouseCoopers.

Acquisitions in West Texas’ Permian Basin and the Northeast’s Marcellus and Utica shale plays led the way throughout the year. The first six months counted $110 billion in total U.S. energy deals, but only $37 billion in the second quarter. The overall first six months number jumps to $137 billion when including Canada, according to Deloitte.

However, Deloitte cautiously warned that lower oil price risks and uncertainty could just as quickly put a lid on transactions in the back half of 2017.

The $37 billion in quarterly deal-making is still a 42 percent jump from the same time period last year.

“The first half of 2017 set a record for oil and gas M&A despite oil prices declining by 16 percent during the period,” said Doug Meier, PwC’s U.S. oil and gas sector deals leader. So called mega-deals led the way because the values of the acquisitions increased much more than the quantities of the deals.

There were only $54 billion in deals in the first half of 2016, but the second half surged with $148 billion, exceeding $200 billion for the year.

Some of the biggest deals in 2017 came from companies paying top dollar for strong positions in the booming Permian Basin. Exxon Mobil, Houston-based Noble Energy, Houston’s Marathon Oil and even Austin-based Parsley Energy are all spending billions of dollars each on Permian growth.

In the Northeast, Pittsburgh-based EQT Corp. is paying almost $7 billion to acquire Pennsylvania natural gas rival Rice Energy. The deal would push EQT past Exxon as the nation’s largest gas producer.

Apart from exploration and production deals, mergers and acquisitions among pipeline companies were the next top area for deals, following by refining and petrochemical deals, and then by oilfield services.

American and European companies also fell out of love with the Canadian oil sands, selling the acreage back to Canadian companies.

In major deals worth nearly $25 billion combined, Marathon and Royal Dutch Shell sold its oil sands acreage to Canadian Natural Resources. That was followed by Houston-based ConocoPhillips selling its Canadian stake to Calgary-based Cenovus Energy.


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