Global oil and gas transaction activity by region
According to EY, 2013 was a year of regional transaction themes and non-African NOC buyers. East Africa saw more transactions activity in emerging oil and gas provinces due to renewed exploration appetite in the West African and West Transform margins.
Deep-water Morocco and Tunisian deals involved entrants to North Africa, while the rest of the region saw low deal volumes, probably driven by political instability. South Africa and Namibia continued to attract new entrant to the region.
In 2013, while total transaction volumes fell to 92 from 107 deals in 2012, reported transaction value rose from US$ 11.7 billion in 2012, to US$ 22.2 billion.
Overall deal value in Asia was lower in 2013 due to the absence of large deals in downstream and oilfield services (OFS), which decreased by as much as 90%. However, Asian NOCs dominance in the global market prevailed with the Chinese NOCs continuing their acquisition spree to secure energy supplies for the country. The largest deal for the year was between CNPC and Rosneft for US$ 60 billion as upfront payment by China for the supply of 300 000 bpd of crude oil from Russia for the next 25 years.
Asian buyers accounted for almost 40% of the value of deals greater than US$ 1 billion.
In 2013, transaction activity in Australia was relatively subdues. Continued tight conditions in equity markets meant Australian junior oil and gas companies remained starved of opportunity, and as a result the number of deals fell considerably to 58, compared to 91 in 2012.
However, the value of regional oil and gas transactions over the period decline dramatically from US$ 16 4 billion to US$ 1.4 billion. Consistent with the prior years most of the transactions (86%) were in the upstream sector, and this year upstream represented approximately 93% of the total reported deal value.
According to EY, global interest in Canada’s oil and gas industry continues to be strong although the actual transactions executed in 2013 are far fewer than 2012 figures.
The volume of Canadian transaction activity in 2013 was down by 32% compared to 2012 and deal values fell by 77% year over year, from US$ 55 billion to US$ 12.8 billion in accumulated value.
In 2012, the CIS countries and primarily Russia, continued lat year’s string activity in oil and gas transactions. The reported value of deals in CIS/Russia in 2013 increased 46% to more than US$ 110 billion, as compared to the 2012 total of almost US$ 75 billion.
European oil and gas transaction volumes declined by 22% in 2013, from 208 deals in 2012 to 162. Consequently, the total reported value of oil and gas transactions declined US$ 20.7 billion from US$ 30.3 billion in 2012, a decline of almost 32%.
Economic recovery in 2014 should support positive sentiment in midstream and downstream activity, according to EY. Economic improvement is also likely to crystallise resolution around underperformers and EY holds that a ‘refresh’ in the financial markets could open the door for a next generation of growth businesses, particularly likely among Europe’s upstream and OFS sectors.
M&A activity in the oil and gas sector in India continued to be dominated by outbound acquisitions by Indian National Oil Companies. EY expects outbound M&A activity from Indian NOCs to remain strong in 2014, and in-bound LNG regasification and petrochemical projects are anticipated to attract domestic and inbound M&A interest.
Latin America and the Caribbean
Oil and gas transaction activity in Latin America and the Caribbean in 2013 declined slightly in reported deal value, dropping to just under US$ 15 billion from just over US$ 15 billion in 2012.
While activity in the region has historically been dominated by deals in Brazil, activity in 2013 was more broadly distributed across the region. Notable in 2013 were the inbound investments by NOCs from China, Russia, and India. NOCs accounted for three of the five largest deals in the region in 2013.
Deal activity in the Middle East was geographically spread, with countries such as the UAE, Oman and Iraq being the locations of multiple transactions. Overall the actual number of transactions in the region fell 40% from 44 in 2012 to 26 in 2013, whereas the overall transaction value increased slightly from US$ 2.7 billion in 2012 to US$ 3.1 billion in 2013.
Overall in 2013, oil and gas transaction values in the US decreased 37%, while deal volume decreased 21% compared to 2012. US transactions accounted for nearly 31% of total global oil and gas transaction values in 2013 (compared to 40% in 2012) and 39% of the transaction volumes (compared to 38% in 2012).
In general, 2013 was characterised by a fairly steady flow of US oil and gas M&A activity in each of the first three quarters of the year with a drop-off in the fourth quarter.
Adapted from a report by Emma McAleavey.