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November 26, 2018

Quarterly upstream M&A and capital raising deals – Q3 2018

GlobalData’s latest report, ‘Quarterly Upstream M&A and Capital Raising Deals Review – Q3 2018’, shows that global M&A and raising activity in the upstream sector totaled $80.9bn in Q3 2018.

By GlobalData Energy

GlobalData’s latest report, ‘Quarterly Upstream M&A and Capital Raising Deals Review – Q3 2018’, shows that global M&A and raising activity in the upstream sector totaled $80.9bn in Q3 2018. This was a significant increase of 45% from the $55.9bn in M&A and capital raising deals announced in Q2 2018. On the volume front, the number of deals decreased by 18% from 441 in Q2 2018 to 362 in Q3 2018.

A total of 111 M&A deals, with a combined value of $13bn, were recorded in the conventional segment, and 88 deals, with a combined value of $31.5bn, were recorded in the unconventional segment.

Upstream M&A deal value and count, Q3 2018

Upstream M&A

Source: Deals Analytics, GlobalData Oil and Gas. © GlobalData

Capital raising, through debt offerings, witnessed an increase of 20% in deal value, recording $32.4bn in Q3 2018, compared with $27.1bn in Q2 2018. However, the number of debt offering deals decreased by 10% from 60 in Q2 2018 to 54 deals in Q3 2018.

Capital raising through equity offerings registered a decrease of 3% in the number of deals and 8% in deal value with 98 deals, of a combined value of $2.4bn, in Q3 2018, compared with 101 deals, of a combined value of $2.6bn, in the previous quarter. 11 private equity/venture capital deals, with a combined value of $1.7bn, were recorded in the upstream industry in Q3 2018, compared with 12 deals, with a combined value of $950.3m, in Q2 2018.

Upstream capital raising deal value and count, Q3 2018

Upstream M&A

Source: Deals Analytics, GlobalData Oil and Gas. © GlobalData

One of the top M&A deals of Q3 2018 was BP’s agreement to acquire a 100% stake in Petrohawk Energy from BHP Billiton Petroleum for a cash consideration of $10.5bn. Petrohawk holds assets in the Eagle Ford, Haynesville, and Permian Basin areas of Texas. The Eagle Ford shale acreage covers an area of 194,000 acres of land with 1,400 gross drilling locations located in southern Texas; the Permian Basin acreage covers an area of 83,000 acres of land with 3,400 gross drilling locations located primarily in Reeves County, Delaware basin, west Texas; and the Haynesville/Bossier acreage covers an area of 194,000 acres of land with 720 gross drilling locations located in east Texas and northern Louisiana.

The assets have a combined current production of approximately 190,000 barrels of oil equivalent per day (boed) (45% oil). Following the completion of the transaction, BHP will exit from the US shale business. The transaction implies a value of $55,263.16 per boe of daily production.

One of the top capital raising deals of Q3 2018 was Chesapeake Energy’s public offering of senior notes, for gross proceeds of $1.3bn. The company intends to use the proceeds from the offering, together with cash on hand and borrowings under the credit facility, to repay borrowings under its term loan, and for general corporate purposes, which may include the repayment, redemption, or repurchase of outstanding indebtedness, including the second lien notes.

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