GlobalData’s latest report, ‘Monthly Upstream Deals Review – April 2017’, shows that a combined value of $7bn in mergers and acquisitions (M&A) were announced in the upstream sector in April 2017. This was a substantial decrease of 79% from the $33.5bn in M&A deals announced in the previous month.
A year-on-year comparison shows a significant increase of 52% in deal value in April 2017, when compared to April 2016’s value of $4.6bn. Of the total value, conventional acquisitions were worth $6bn; and unconventional acquisitions were worth $946.6m. The month recorded six oil and gas M&A deals with values greater than $100m, together accounting for $6.5bn.
Hilcorp San Juan’s agreement to acquire dry gas assets located in the San Juan Basin, northwest New Mexico and southwest Colorado, the US, from ConocoPhillips, for a purchase consideration of up to $3bn, was one of the top deals registered in April 2017. The assets cover about 1.3m acres of land, and the production from the assets was 124,000 barrels of oil equivalent per day (boed) (80% natural gas) in 2016.
The assets have proved (1P) reserves of 600 million barrels of oil equivalent (mmboe). The company estimates the production from the assets to be approximately 115,000boed (80% natural gas and 20% natural gas liquids), in 2017. Wells Fargo Securities LLC is acting as financial advisor to ConocoPhillips in the transaction. The transaction will enable Hilcorp to expand its oil and gas assets base in San Juan Basin. The transaction implies values of $24,193.55 per boe of daily production, $5 per boe of 1P reserves, and $2,307.69 per net acre of land.
On the volume front, the number of M&A deals decreased by 39% from 64 in March 2017 to 39 in April 2017, of which 12 were cross border transactions and the remaining 27 were domestic transactions. Asia-Pacific (APAC) was the destination of choice for cross-border M&A activity in April 2017, recording five cross-border transactions in the month.
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Regionally, Americas led the global M&A market in terms of volume and value, with shares of 64% and 59% respectively, in April 2017. This comprised 25 deals, with a combined value of $4.1bn. The Europe, Middle East and Africa registered eight deals, or 21% of the total, with of a combined value of $729.4m; while APAC recorded six deals, or 15% of the total, with a value of $2.1bn in April 2017.