Quarterly upstream M&A and capital raising deals review – Q1 2020

GlobalData Energy 21 May 2020 (Last Updated July 8th, 2020 12:29)

Quarterly upstream M&A and capital raising deals review – Q1 2020

GlobalData’s latest report Quarterly Upstream M&A and Capital Raising Deals Review – Q1 2020 shows that global mergers and acquisitions (M&A) and raising activity in the upstream sector totalled $47.4bn in Q1 2020. This was a decrease of 44% from $85bn in M&A and capital raising deals announced in Q4 2019. On the volume front, the number of deals decreased by 28% from 360 in Q4 2019 to 258 in Q1 2020.

Of the total value, $2.2bn was registered in mergers and acquisitions (M&A) in Q1 2020. This was a substantial 90% decrease from $22.4bn in M&A deals announced in the previous quarter. The number of M&A deals also decreased by 44% from 174 in Q4 2019 to 98 in Q1 2020.

A total of 65 M&A deals with a combined value of $1.1bn were recorded in the conventional segment and 33 deals with a combined value of $1.1 bn were recorded in the unconventional segment in Q1 2020.

On the capital raising front, a total value of $45.2bn in capital raising was announced in the upstream sector in Q1 2020. This was a 28% decrease from $62.6bn in capital raising deals announced in the previous quarter.

Through equity offerings, capital raising registered a significant decrease of 44% in the number of deals and a substantial decrease of 83% in deal value with 59 deals of a combined value of $5.6bn in Q1 2020 compared with 106 deals of a combined value of $33.4bn in the previous quarter. Through debt offerings, capital raising witnessed a considerable increase in deal values, recording $38.8bn in Q1 2020 compared with $27.4bn in Q4 2019. The number of debt offerings remained unchanged with 55 deals in both Q4 2019 and Q1 2020.

The top M&A deal in Q1 2020 was Premier Oil’s agreement to acquire Andrew area assets and non-operating interest in Shearwater field in the UK Central North Sea from BP for a cash consideration of $625m.

The Andrew Area assets include the Andrew (62.75%), Arundel (100%), Cyrus (100%), Farragon (50%) and Kinnoull (77.06%) oil and gas fields and associated subsea infrastructure are located in Blocks 16/23a (Arundel), 16/23a (South), 16/23c (E), 16/23c (South), 16/24a (All), 16/28a (Cyrus), 16/28a (Rest), 16/28b (Andrew) and 16/28b (Rest) in the UK Central North Sea. The Shearwater gas condensate field is located in Block 22/30b in the UK Central North Sea. The Andrew and Shearwater assets will add production of approximately 23 kboepd (net) and net 2P reserves of 36 mmboe.

The transaction implies values of $27,173,91 per boe of daily production and $17.36 per boe of 2P reserves.

The top capital raising deal in Q1 2020 was ExxonMobil’s public offering of notes for $8.5bn. The company intends to use the net proceeds from the offering for general corporate purposes, including, but not limited to, refinancing a portion of its existing commercial paper borrowings, funding for working capital, acquisitions, capital expenditures and other business opportunities.

Upstream M&A deal value and count, Q1 2020

Upstream capital raising deal value and count, Q1 2020