GlobalData’s latest report, Quarterly Midstream M&A Deals Review – Q2 2020, shows that a combined value of $14.5bn in mergers and acquisitions (M&A) was announced in the midstream sector in Q2 2020. This was a substantial increase of 99% from the $7.3bn in M&A deals announced in the previous quarter. A year-on-year comparison shows a decrease of 14% in the number of deals and a substantial decrease of 85% in values in Q2 2020 compared to 100 deals with a combined value of $95.6bn in Q2 2019. During the quarter, there were 13 midstream M&A deals with values greater than $50m, together accounting for $13.6bn.
National Fuel Gas agreement to acquire upstream and midstream gathering assets located in Pennsylvania, US, from SWEPI, a subsidiary of Shell, for approximately $541m, was one of the top deals registered in the midstream industry in Q2 2020. The midstream assets include approximately 142 miles of gathering pipelines and related compression, over 100 miles of water pipelines and associated water handling infrastructure. The gathering facilities are interconnected with various interstate pipelines, including National Fuel’s Empire pipeline system with the potential to tie into National Fuel’s existing Covington gathering system.
JP Morgan Securities LLC and Goldman Sachs & Co LLC are acting as financial advisors, while Kirkland & Ellis LLP and Jones Day are acting as legal advisors to National Fuel in the transaction. The transaction will provide National Fuel Gas with a unique and highly strategic opportunity to strengthen its integrated development approach in the region. The transaction is in line with Shell’s divesting non-core assets and its strategy, which focuses on the development of higher-margin, light tight oil assets.
Midstream M&A Deal Value and Count, Q2 2020
On the volume front, the number of M&A deals decreased by 26% from 117 in Q1 2020 to 86 in Q2 2020, of which 43 were cross-border transactions and the remaining 43 were domestic transactions. Europe was the destination of choice for cross-border M&A activity in Q2 2020, recording 13 cross-border transactions in the quarter.
Regionally, North America registered a combined M&A value of $1.2bn from 22 deals. This was a 44% decrease in the number of deals and a significant decrease of 68% in deal value compared to 39 deals worth a combined value of $3.8bn registered in Q1 2020. Europe accounted for 28% of the global acquisitions market in Q2 2020, comprising 24 acquisitions, of which 13 were cross-border and the remaining 11 were domestic acquisitions, while Asia accounted for 15 global deals or 17% in Q2 2020, of which seven were cross-border acquisitions and the remaining eight were domestic acquisitions. Africa and Oceania registered ten and nine deals respectively in Q2 2020, and South America accounted for 5% of global deals or four deals.