The biggest ever mergers and acquisitions in the oil and gas industry

Vasanthi Vara 19 June 2019 (Last Updated January 31st, 2020 07:43)

The majority of the biggest mergers and acquisitions in the oil and gas industry in the last ten years occurred between US-based companies looking to expand their asset portfolio. Offshore-technology lists the top ten mergers and acquisitions, based on transaction value.

The biggest ever mergers and acquisitions in the oil and gas industry
Kinder Morgan created on the of biggest energy infrastructure companies in North America by acquiring El Paso Pipeline Partners, Kinder Morgan Energy Partners, and Kinder Morgan Management in the biggest ever acquisition in the oil and gas industry. Image courtesy of Kinder Morgan.

Top ten M&As in oil and gas: Ranking the biggest

10. Marathon Petroleum and Andeavor Logistics merger – $23bn

9. Enbridge Income Fund’s acquisition of Enbridge Pipelines (Athabasca) and Enbridge Pipelines – $30.4bn

8. ConocoPhillips’ acquisition of Burlington Resources – $35.6bn

7. Kinder Morgan’ acquisition of El Paso Corporation – $38bn

6. ExxonMobil Corporation’s acquisition of XTO Energy – $41bn

5. Royal Dutch Shell’s acquisition of BG Group – $54.03bn

4. Occidental Petroleum and Anadarko Petroleum acquisition – $57bn

3. Energy Transfer Equity’s acquisition of Energy Transfer Partners – $60.4bn

2. Saudi Arabian Oil Company and Saudi Basic Industries Corporation acquisition – $69.1bn

1. Kinder Morgan’s acquisition of El Paso Pipeline Partners, Kinder Morgan Energy Partners, and Kinder Morgan Management – $76bn

10. Marathon Petroleum and Andeavor Logistics merger – $23bn

Biggest ever mergers and acquisitions
Marathon Petroleum is poised to acquire Andeavor Logistics in a $23bn deal that will be one of the biggest ever acquisitions in the oil and gas industry. Image courtesy of Marathon Petroleum Corporation.

Marathon Petroleum Corporation and Andeavor Logistics signed a definitive merger agreement, under which the former will acquire the latter for $23bn. The transaction has been approved by the board of directors of both the companies and is pending regulatory approvals. It is expected to be closed in the second half of 2019.

The transaction is expected to create a diversified midstream company and expand Marathon Petroleum’s position in the Marcellus shale and Permian basin. It will also enable the company to deploy funds in high-growth projects.

Marathon Petroleum is an integrated energy company operating some of the largest refineries in the US. Andeavor Logistics is a midstream logistics company operating in three businesses, namely transportation, gathering and processing, and wholesale.

9. Enbridge Income Fund’s acquisition of Enbridge Pipelines (Athabasca) and Enbridge Pipelines – $30.4bn

Biggest ever mergers and acquisitions
Enbridge Income Fund became part of Enbridge after being acquired by the latter in November 2018. Image courtesy of Kyle1278.

Enbridge Income Fund (EIF), a subsidiary of Enbridge, acquired Enbridge Pipelines (Athabasca) and Enbridge Pipelines from Enbridge and IPL System, a subsidiary of Enbridge, for $30.4bn in September 2015. The merger was announced in June 2015 and included an equity consideration of $18.7bn and a debt assumption of $11.7bn.

Enbridge Pipelines (Athabasca) and Enbridge Pipelines comprise the Canadian Liquids Pipelines (CLP) business and the Canadian renewable energy assets. The CLP business includes the Canadian Mainline System and the Regional Oil Sands system, which transport crude oil and bitumen from various oil sands projects to Edmonton and Hardisty in Alberta.

EIF holds a diverse energy infrastructure business comprising transportation and storage assets. The acquisition was completed to enhance EIF’s long-term growth prospects and scale of operations. EIF was acquired by Enbridge in November 2018.

8. ConocoPhillips’ acquisition of Burlington Resources – $35.6bn

Biggest ever mergers and acquisitions
The acquisition of Burlington Resources added natural gas exploration and production assets to ConocoPhillips’ portfolio. Image courtesy of ConocoPhillips Company.

ConocoPhillips completed the acquisition of Burlington Resources for $35.6bn in March 2006. The transaction was announced in December 2005 following the signing of a definitive agreement. ConocoPhillips shareholders own 83% of the combined company while the remaining 17% is owned by Burlington shareholders. The enterprise value of the combined entity was estimated to be $135bn.

The acquisition added high-quality, low-risk natural gas exploration and production assets located in North America to ConocoPhillips’ portfolio. It strengthened the company’s near-term position by adding conventional and unconventional resources to its portfolio and the long-term position by adding LNG and Arctic gas projects.

Burlington Resources was an exploration and production company with a strong natural gas development and production portfolio in North America. ConocoPhillips is an integrated oil and gas company with operations across 17 countries.

7. Kinder Morgan’s acquisition of El Paso Corporation

Biggest ever mergers and acquisitions
Kinder Morgan’s acquisition of El Paso Corporation created one of the biggest midstream companies in North America. Image courtesy of Kinder Morgan.

Kinder Morgan acquired El Paso Corporation in May 2012 for $38bn, under a definitive agreement signed in October 2011. The purchase consideration included the assumption of El Paso’s outstanding debt.

The acquisition created one of the biggest midstream companies in North America with an enterprise value of $94bn. The combined company enabled Kinder Morgan to become one of the biggest producers of oil in Texas, the biggest terminal operator, as well as the biggest independent transporter of petroleum and related products.

Kinder Morgan is a US-based midstream energy company operating pipelines and 180 terminals. The pipelines transport petroleum and related products while its terminals store petroleum products and chemicals. El Paso Corporation was a natural gas and energy products provider, as well as an operator of interstate natural gas pipeline systems.

6. ExxonMobil Corporation’s acquisition of XTO Energy – $41bn

Biggest ever mergers and acquisitions
ExxonMobil acquired XTO Energy for the development of unconventional natural gas and oil resources.

ExxonMobil Corporation acquired XTO Energy in June 2010, following a formal announcement in December 2009. ExxonMobil also assumed $10bn of XTO’s outstanding debt at that time, as part of the acquisition.

The transaction enabled ExxonMobil to focus on the development of unconventional natural gas and oil resources and helped to position itself for meeting the long-term energy demand while supporting the production of clean-burning natural gas resources.

XTO Energy, one of the biggest unconventional natural gas producers, now operates as a subsidiary of ExxonMobil. Its portfolio included shale gas, tight gas, coal bed methane, and shale oil assets across the US, which complemented ExxonMobil’s portfolio in the US, Canada, Germany, Indonesia, Poland, Hungary, and Argentina.

ExxonMobil is an international oil and gas company operating one of the biggest refineries in the world. The company markets petroleum products and operates a chemicals business.

5. Royal Dutch Shell’s acquisition of BG Group – $54.03bn

Biggest ever mergers and acquisitions
Shell’s acquisition of BG Group enhanced its LNG and deep-water asset portfolio. Image courtesy of P.L. van Till.

Royal Dutch Shell (Shell) acquired BG Group in February 2016 for a $19.03bn cash payment and $34.05bn worth of shares in exchange of all the shares of BG Group.

The acquisition was part of Shell’s growth strategy to develop a more focused and simpler operational structure comprising upstream and downstream cash engines, deepwater, and liquefied natural gas (LNG). BG Group’s acquisition enhanced Shell’s LNG and deepwater asset portfolio, particularly in Australia and Brazil. It enabled the company to accelerate and de-risk its LNG and deepwater-focused strategy.

BG Group was involved in the exploration, development, and production of hydrocarbons, LNG shipping and sale, and operation of LNG import facilities. Shell is an oil and gas company headquartered in the Netherlands.

4. Occidental Petroleum and Anadarko Petroleum acquisition – $57bn

Biggest ever mergers and acquisitions
Anadarko Petroleum has agreed to be acquired by Occidental Petroleum under an agreement signed in May 2019 that will make it the world’s fourth biggest oil and gas acquisition. Image courtesy of Trey Perry.

Occidental Petroleum signed a definitive agreement with Anadarko Petroleum in May 2019 to acquire the latter. The transaction is expected to be completed in the second half of 2019, upon approval of shareholders, regulatory bodies, and fulfilment of certain closing conditions.

The combined company is expected to have an enterprise value of more than $100bn and comprise a diverse portfolio of unconventional, conventional, midstream and chemical assets. The shareholders of Occidental will hold a 71% stake in the new company and the remaining 29% will be held by Anadarko shareholders.

Occidental is an oil and gas exploration and production company operating in more than 40 countries in North America, the Middle East and Latin America. Anadarko is one of the world’s biggest independent oil and gas exploration and production companies.

3. Energy Transfer Equity’s acquisition of Energy Transfer Partners – $60.4bn

Biggest ever mergers and acquisitions
Energy Transfer Equity consolidated its operations by acquiring Energy Transfer Partners and changing its name to Energy Transfer. Image courtesy of Jason Woodhead.

Energy Transfer Equity (ETE) completed the acquisition of Energy Transfer Partners (ETP) in October 2018. ETP was merged with a subsidiary of ETE under a unit-for-unit exchange scheme. ETE changed its name to Energy Transfer, while ETP changed its name to Energy Transfer Operating, following the acquisition.

The acquisition was aimed at simplifying the operational structure and reducing complexity. It was designed to align with the economic interests of both ETE and ETP.

ETE is a limited partnership that owns and operates natural gas, natural gas liquids (NGL), crude oil and refined products assets, as well as LNG terminalling. ETP is a limited partnership that owns and operates natural gas, crude oil, and NGL transportation and storage assets, as well as terminalling assets.

2. Saudi Arabian Oil Company and Saudi Basic Industries Corporation acquisition – $69.1bn

Biggest ever mergers and acquisitions
Saudi Arabian Oil Company has signed an agreement to acquire a 70% interest in Saudi Basic Industries Corporation for $69.1bn. Image courtesy of Saudi Arabian Oil Co.

Saudi Arabian Oil Company (Saudi Aramco) signed a share purchase agreement to acquire a 70% interest in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund of Saudi Arabia for $69.1bn. The remaining 30% stake in SABIC is in the form of publicly traded shares, which Saudi Aramco does not intend to purchase.

The acquisition is part of Saudi Aramco’s long-term growth strategy aimed at strengthening its downstream portfolio. The company plans to increase its refining capacity from 4.9 million barrels per day (Mbpd) to between 8Mbpd and 10Mbpd by 2030.

Saudi Aramco is an oil and gas exploration and production company that markets and delivers crude oil, related products, and chemicals to various countries across Asia, Europe, and the Americas. SABIC is one of the world’s largest petrochemicals companies and comprises four business segments, including petrochemicals, specialities, agri-nutrients, and metals.

1. Kinder Morgan’s acquisition of El Paso Pipeline Partners, Kinder Morgan Energy Partners, and Kinder Morgan Management – $76bn

Biggest ever mergers and acquisitions
Kinder Morgan created on the of biggest energy infrastructure companies in North America by acquiring El Paso Pipeline Partners, Kinder Morgan Energy Partners, and Kinder Morgan Management in the biggest ever acquisition in the oil and gas industry. Image courtesy of Kinder Morgan.

Kinder Morgan completed the acquisition of El Paso Pipeline Partners (EPPP), Kinder Morgan Energy Partners (KMEP), and Kinder Morgan Management (KMM) in November 2014.

The transaction was aimed at creating one of the largest energy infrastructure companies in North America with an enterprise value of approximately $140bn. It also enabled Kinder Morgan to consolidate four separately traded equity securities into one security, while creating a leading position in each of its business segments.

Kinder Morgan is a midstream infrastructure company that owns and operates pipelines that transport natural gas, crude oil, and other products. KMEP was a limited partnership pipeline transportation and energy storage company while EPPP was an owner and operator of interstate natural gas transportation pipelines and natural gas storage facilities. KMM was created to handle the institutional ownership of KMEP equity.