Upstream oil and gas deals activity, including capital markets and mergers and acquisitions, totaled US$23.5 billion from 114 transactions in May 2015, an almost $75 billion drop in value from the $98.4 billion achieved across 111 deals in April 2015, says research and consulting firm GlobalData.
According to the company’s latest monthly upstream deals review, mergers and acquisitions accounted for 50% of total upstream deals activity in May 2015, with a value of $11.7 billion across 13 transactions. This also represents a significant drop from the $71.2 billion recorded in April 2015, which was boosted by Shell’s agreement to acquire BG Group for $69.9 billion.
North America led the global acquisitions market with $12 billion from 35 deals, representing a 97% share. Of these deals, 26 were announced, with a combined value of $11.9 billion, while nine were completed, totaling $76.2 million.
“[Mergers and acquisition] deal flow is at the highest level since December last year, excluding the Shell-BG deal, and buyers appear more aggressive to take advantage of market conditions,” says Matthew Jurecky, GlobalData’s head of oil and gas research and consulting
Jurecky adds that the Americas’ top deal in May was Alfa and Harbour Energy’s announcement to acquire the remaining 81.05% stake in Pacific Rubiales Energy for approximately $5.3 billion, including assumed debt of $3.9 billion. This represents the fourth largest upstream deal announced since oil prices collapsed, after Shell’s acquisition of BG, Repsol’s purchase of Talisman, and LetterOne acquiring RWE’s upstream assets.
“If Alfa’s offer proves successful, the company will have skillfully capitalized on low oil prices ravaging Pacific Rubiales’ share price, which has dropped by over 70%,” says Jurecky. “Although a significant premium is being paid to the current price, rising oil prices would ultimately make the deal a bargain. Furthermore, it is a strong move strategically for more participation in Mexico, one of the top upstream markets globally in terms of opportunity.”