GlobalData’s latest report, ‘Quarterly Upstream M&A and Capital Raising Deals Review – Q4 2019’, shows that global M&A and raising activity in the upstream sector totalled $82.4bn in Q4 2019. This was a marginal increase of 6% from the $77.6bn in M&A and capital raising deals announced in Q3 2019. However, on the volume front, the number of deals decreased marginally from 332 in Q3 2019 to 339 in Q4 2019.
Of the total value, $21.1bn was registered in mergers and acquisitions (M&A) in Q4 2019. This was a 37% decrease from the $33.5bn in M&A deals announced in the previous quarter. The number of M&A deals also decreased by 9% from 169 in Q3 2019 to 153 in Q4 2019.
A total of 105 M&A deals, with a combined value of $12.1bn, were recorded in the conventional segment, and 48 deals, with a combined value of $9bn, were recorded in the unconventional segment in Q4 2019.
On the capital raising front, a total value of $61.3bn in capital raising was announced in the upstream sector in Q4 2019. This was a 3% increase from the $44.1bn in capital raising deals announced in the previous quarter.
Capital raising, through equity offerings, witnessed an enormous increase in deal values, recording $33.4bn in Q4 2019, compared with a mere $1.2bn in Q3 2019. The number of equity offering deals also increased by 7% from 95 in Q3 2019 to 102 deals in Q4 2019. Capital raising, through debt offerings, registered a decrease of 11% in the number of deals and 37% in deal value with 49 deals, of a combined value of $26.2bn, in Q4 2019, compared with 55 deals, of a combined value of $41.5bn, in the previous quarter.
One of the top M&A deals of Q4 2019 was WPX Energy’s agreement to acquire Felix Energy from Felix Investments for $2.5bn. Felix Energy has approximately 1,500 gross undeveloped locations in the eastern portion of the basin, with expected production of approximately 60,000 barrels of oil equivalent per day (mboed) (70% oil) at the time of anticipated closing. The company also has 58,500 net acres in an over-pressured, oily portion of the basin with six productive benches.
Barclays and Tudor, Pickering, Holt & Co are acting as financial advisors, while Weil, Gotshal & Manges LLP is acting as a legal advisor to WPX in the transaction. Jefferies LLC is acting as a financial advisor, while Vinson & Elkins LLP is acting as a legal advisor to Felix Energy in the transaction.
The transaction implies values of $30,000 per boe of daily production and $11,965.81 per net acre of land.
The top capital raising deal in Q4 2019 was Saudi Aramco’s IPO of 3,450 million shares, at a price of $8.53 per share, for gross proceeds of $29.4bn, including the underwriters’ over-allotment option of 450 million shares. In the offering, the government of Saudi Arabia sold the shares, representing a 1.5% stake in Saudi Aramco.