Upstream M&A deal value and count
A combined value of $6.7bn in mergers and acquisitions (M&A) were announced in the upstream sector in February 2017. This was a substantial decrease of 70% from the $22.2bn in M&A deals announced in the previous month. A year-on-year comparison shows a steep increase in deal value in February 2017, when compared to February 2016’s value of $3bn. Of the total value, conventional acquisitions were worth $3.5bn and unconventional acquisitions were worth $3.2bn. The month recorded six oil and gas M&A deals with values greater than $100m, together accounting for $6.3bn.
Parsley Energy’s agreement to acquire certain undeveloped acreage and producing oil and gas properties located in Midland Basin, Texas, the US, from Double Eagle Energy, for a purchase consideration of $2.8bn, was one of the top deals registered in February 2017. Parsley Energy intends to fund the consideration through the payment of $1.4bn in cash and through the issuance of approximately 39.4m units, amounting to approximately $1.4bn. The properties cover an area of approximately 167,000 gross (71,000 net) acres of land. As of January 1, 2017, the estimated net production from the properties is approximately 3,600 barrels of oil equivalent per day (boed). Following the completion of the transaction, Parsley Energy’s net acreage will be increased to approximately 227,000 acres in the Permian Basin. The transaction will enable Parsley Energy to strengthen its oil and gas assets position in Permian Basin. The transaction implies values of $777,777.78 per boe of daily production and $39,436.62 per net acre of land
On the volume front, the number of M&A deals decreased by 9% from 53 in January 2017 to 48 in February 2017, of which 14 were cross border transactions and the remaining 34 were domestic transactions. EMEA was the destination of choice for cross-border M&A activity in February 2017, recording six cross-border transactions in the month.
Regionally, the Americas led the global M&A market in terms of volume and value, with shares of 75% and 50% respectively in February 2017. This comprised 36 deals, with a combined value of $3.3bn. EMEA registered seven deals, or 15% of the total, with of a combined value of $3.3bn; while Asia-Pacific recorded five deals, or 10% of the total, with a value of $1.2m in February 2017.