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April 26, 2019

M&A activity in decline for global oil and gas upstream sector

Global M&A and capital raising activity in the upstream sector totalled $26.6bn in Q1 2019.

By GlobalData

GlobalData’s latest report, ‘Quarterly Upstream M&A and Capital Raising Deals Review – Q1 2019’, shows that global M&A and capital raising activity in the upstream sector totalled $26.6bn in Q1 2019.

Global oil and gas M&A 2019

This was a significant decrease of 45% from the $48bn in M&A and capital raising deals announced in Q4 2018. On the volume front, the number of deals decreased by 31% from 352 in Q4 2018 to 243 in Q1 2019.

A total of 82 M&A deals, with a combined value of $3.9bn, were recorded in the conventional segment, and 31 deals, with a combined value of $2.6bn, were recorded in the unconventional segment.

Capital raising, through debt offerings, witnessed a marginal increase of 6% in deal value, recording $17.8bn in Q1 2019, compared with $16.8bn in Q4 2018. The number of debt offering deals also increased by 10% from 30 in Q4 2018 to 33 deals in Q1 2019.

Capital raising, through equity offerings, registered a decrease of 17% in the number of deals and 77% in deal value with 84 deals, of a combined value of $1bn, in Q1 2019, compared with 101 deals, of a combined value of $4.4bn, in the previous quarter.

13 private equity/venture capital deals, with a combined value of $1.3bn, were recorded in the upstream industry in Q1 2019, compared with 13 deals, with a combined value of $708.3m, in Q4 2018.

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The top M&A deal of Q1 2019 was PTTEP’s agreement to acquire Murphy Sarawak and Murphy Sabah from Murphy for approximately $2.2bn. Murphy Sarawak and Murphy Sabah hold 5 projects (SK309 & SK311, Sabah K, Sabah H, SK314A, and SK405B) with total estimated 1P reserves of 129 mmboe and 2P reserves of approximately 274 mmboe.

Following the completion of the transaction, Murphy will exit from Malaysia. The transaction implies values of $46,395.83 per barrels of oil equivalent (Boe) per day, $17.26 per Boe of 1P reserves and $8.13 per Boe of 2P reserves.

One of the top capital raising deals of Q1 2019 was Petrobras’ issuance of 6.9% and 5.75% notes, for total gross proceeds of $3bn. Banco Bradesco BBI SA, BNP Paribas Securities Corp, Citigroup Global Markets Inc, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc, Santander Investment Securities Inc, ABN AMRO Securities (USA) LLC, BBVA Securities Inc, and Commerz Markets LLC acted as underwriters, while Hogan Lovells International LLP acted as legal adviser to Petrobras for the offering. The company intends to use the net proceeds from the offerings to purchase the old notes, and to use any remaining net proceeds for general corporate purposes.

Upstream M&A deal value and count, Q1 2019

Source: GlobalData

 

Upstream capital-raising deal value and count, Q1 2019

Source: GlobalData

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