|By Marketwired .||
|January 14, 2014 06:46 PM EST||
HOUSTON, TX -- (Marketwired) -- 01/14/14 --
- Largest deal of the year (in U.S. and globally) is Devon's $6.0 billion Eagle Ford acquisition.
- Foreign U.S. investments drop to $6.0 billion vs. $11.3 billion in 2012 & $44.8 billion in 2011.
- Most impactful U.S. deal of the year: Linn Energy's $4.9 billion buy of Berry Petroleum.
- U.S. land grab in known unconventional resource plays substantially over.
- Top U.S. Areas: Eagle Ford, Permian unconventional, Rockies conventional, shallow Gulf of Mexico, Bakken.
- 2013 $51.8 billion deal value down 42% from 2012, unconventional deal share is 54% vs. 45%.
- Roughly eight months of inventory in Deals in Play in the U.S., compared to 11 months globally.
PLS Inc., a leading research, transaction and advisory firm to the global E&P and financial industries, in conjunction with its international partner Derrick Petroleum Services, reported that U.S. upstream oil and gas M&A activity in 2013 totaled $51.8 billion in 519 transactions (including 322 with deal value disclosed). The largest deal -- in the U.S. as well as the world -- is Devon Energy's $6.0 billion cash buy of a prime Eagle Ford position in Texas (including 53,000 boepd and 82,000 net acres) from privately held GeoSouthern Energy. This deal also represents the single largest pure-play unconventional asset buy, surpassing BHP Billiton's $5.0 billion Fayetteville shale acquisition in Arkansas from Chesapeake in November 2010.
Table 1 Top 10 U.S. Oil and Gas Upstream Deals in 2013 Price Announced Buyer Seller ($MM) Asset Location ---------- ------------------ --------------------- ------- ---------------- 11/20/2013 Devon Energy GeoSouthern Energy $6,000 Eagle Ford 02/21/2013 Linn Energy Berry Petroleum $4,900 Multiple 07/18/2013 Fieldwood Energy Apache $3,750 GOM Shelf 01/30/2013 Sinochem Pioneer $1,700 Permian 09/04/2013 Oasis Petroleum Roda Drilling; Zeneco $1,450 Bakken 06/20/2013 Bennu Oil & Gas ATP Oil & Gas $1,269 GOM Deep 01/15/2013 Denbury Resources ConocoPhillips $1,050 Rockies 02/25/2013 Sinopec Chesapeake $1,020 Mississippi Lime 10/03/2013 Templar; Le Norman Forest Oil $1,000 Panhandle TX 12/09/2013 QEP Resources EnerVest $950 Permian ---------- ------------------ --------------------- ------- ---------------- Total $23,089
PLS calculates that 2013's total of $51.8 billion U.S. deal value is down 42% from 2012's record $89.6 billion. However, that 2012 total was skewed by Freeport McMoRan Copper & Gold's $17.6 billion buy of Plains E&P. Excluding, the Plains sale, 2013 deal value would be down 28%, closer to the 17% drop in deal count during the same period (from 624 deals in 2012 to 519 in 2013).
During 2013, the Eagle Ford shale ($8.8 billion) took top honors for deal value followed by the unconventional Permian ($7.5 billion), Rockies conventional ($5.5 billion), shallow Gulf of Mexico ($4.2 billion) and Bakken ($2.9 billion). This compares to 2012 rankings led by the unconventional Permian ($7.7 billion) deepwater Gulf ($7.2 billion), Bakken ($7.0 billion), shallow Gulf of Mexico ($6.3 billion) and conventional Permian ($5.6 billion).
An analysis of M&A activity reveals the U.S. oil and gas industry is in the early stages of transforming from buying land in unconventional plays to drilling and development of these positions. The land rush began in earnest in 2007, kicked into high gear in December 2009 with ExxonMobil's $41.0 billion buy of XTO Energy, and seemed to peak in 2011 with BHP Billiton's $15.1 billion acquisition of Petrohawk.
"As the land grab winds down, companies are now focused on drilling thereby raising additional capital demands," said Brian Lidsky, Managing Director of PLS Inc. "As the drilling capital needs intensify, companies will adjust their inventories to keep finances in order. Subsequent drilling results and the drive for cost efficiencies will also divide winners and losers and could drive market consolidation between the public companies while providing exit opportunities for private independents like Geosouthern. Overall, PLS sees the most deal opportunities in the Eagle Ford, Permian, Bakken and Marcellus core, while mature shale plays like the Barnett offer maintenance opportunity for MLPs like EnerVest."
PLS also notes that core areas are emerging in each of the shale plays for optimal development based on the rocks, infrastructure and completion techniques. In 2013, these core areas continued to be more tightly defined and some companies like Shell and BHP that bought in the periphery or bet on rising natural gas prices have had to take write-downs. As with the Devon/GeoSouthern Eagle Ford transaction, PLS expects the price of entry into the core-of-the-core areas to continue to rise. Scale and efficiencies (pad drilling, completions) ultimately will drive costs lower and set up more consolidation, with top operators earning the upper hand.
Foreign Investment down 86% since 2011 --
Part of the U.S. M&A decline in 2013 is due to less cash being spent by foreign interests. Since 2007, foreign buying of $113 billion accounted for 25% of the U.S. market with 72% of that money going toward the unconventional resources. The peak year was 2011 with $44.8 billion or 53% of the market, of which $34.5 billion was for unconventional. 2011 saw Australia's BHP Billiton buying Petrohawk (Eagle Ford, Haynesville) for $15.1 billion and Norway's Statoil buying Brigham Exploration (Bakken) for $4.7 billion.
Table 2 United States Oil and Gas Upstream Deals Conventional versus Unconventional (1) Conventional Unconventional Total % Unconventional Year Value Count Value Count Value Count Value Count ---------------------------------------------------------------------------- 2013 $23.9 256 $27.8 263 $51.8 519 54% 51% 2012 $48.9 290 $40.7 334 $89.6 624 45% 54% 2011 $21.5 357 $62.4 372 $83.9 729 74% 51% 2010 $30.8 280 $44.7 244 $75.5 524 59% 47% 2009 $14.0 224 $47.8 87 $61.8 311 77% 28% 2008 $25.0 275 $22.9 108 $47.9 383 48% 28% 2007 $45.5 279 $4.2 56 $49.7 335 8% 17% ---------------------------------------------------------------------------- Total $209.7 1,961 $250.5 1,464 $460.2 3,425 54% 43%
Note: (1) Deal Value in US$ billions. Deal Counts include those with values not disclosed.
Since the 2011 peak of $44.8 billion, foreign spending in the U.S. has dropped off dramatically, declining 75% in 2012 to $11.3 billion ($8.8 billion for unconventional resources) and another sequential 47% in 2013 to $6.1 billion ($4.4 billion for unconventional). Since 2007, the only other year that saw less foreign investment was 2009 ($5.4 billion), but that same year ExxonMobil paid $41 billion for XTO Energy, bringing global attention to U.S. unconventional opportunities. While foreign companies remain interested in U.S. assets, it is not likely we will see the rush to invest as quickly in U.S. plays as we did in 2010 and 2011. For those global interests not yet in the U.S., partnering with top operators will continue to be a large part of the equation but we expect foreign investors to be more selective in the future.
MLPs & private equity replacing foreign investors as a go-to source for capital --
Despite the decrease in foreign spending, there remain strong buying sectors including the U.S. upstream MLPs and private equity. On the MLP front, 2013 saw two remarkable transactions. The first is Linn Energy's $4.9 billion acquisition of Berry Petroleum, which closed on December 16 after ten months of reviews. This transaction is a milestone for the M&A markets, marking the first-ever acquisition of a public C-Corp by an upstream LLC, and opens the door for self-described "acquisition machine" Linn and other MLPs to structure transactions for corporate acquisitions, as opposed to asset-based deals. The second notable MLP transaction bucks the MLP buying and dropdown theme and saw Pioneer Natural Resources buy back the 48% stake of its related MLP Pioneer Southwest Energy Partners that it did not own for $606 million. This deal will help Pioneer boost scale and operating efficiencies in the Permian Basin.
Private equity buying and selling remains strong and their coffers are well-stocked. For example, last year's Devon/GeoSouthern deal rewarded private equity firm Blackstone with $1.54 billion. Also in 2013, energy-focused PE firm Riverstone Holdings made its largest commitment to date by backing Fieldwood Energy's $3.75 billion buy of Apache's Gulf of Mexico shelf assets (and already this year its $1.12 billion GOM buy from SandRidge). The Apache sale marks the last exit of any significant presence by a major or large independent from the GOM shallow waters. By and large these companies are re-deploying capital to the U.S. onshore resource plays or deepwater Gulf of Mexico.
$38 billion of Deals in Play --
In addition to tracking completed deals, PLS and Derrick through their Global M&A Database and PLS through its multiple listing service provide the industry's only commercially available comprehensive list of oil and gas buying opportunities in the world, together known as "Deals in Play." On a quarterly basis using PLS and Derrick's proprietary valuation analytics, the firms report a total dollar value of deals available in the upstream oil and gas marketplace. When compared to actual transaction volumes, this leading indicator allows industry participants to gauge relative market strength across various oil and gas regions and plays.
As of January 1, 2014, the rapid growth of the U.S. "Deals in Play" inventory has stabilized and now totals $38 billion, up from $33 billion a quarter ago and $27 billion a year ago. This total represents roughly eight months of M&A activity, compared to $127 billion of "Deals in Play" or 11 months of inventory globally.
For 2014, PLS expects the U.S. deal markets to continue to be driven by: 1) Traditional sale of non-core assets by oil and gas firms; 2) High-quality, later-stage JV opportunities still sourcing capital for drilling; 3) Ample private equity sources energized by recent successes like GeoSouthern and Hilcorp; and 4) MLPs' need to feed their dividend-driven business models.
Later this month, PLS will release its more detailed annual oil and gas M&A study analyzing additional data including regional activity plus valuation trends. Prior studies are available at www.plsx.com/ma. For sales or more information regarding the Global M&A Database, please call PLS Inc. at (713) 650-1212, email [email protected] or visit www.plsx.com/ma.
About The Global M&A Database: PLS Inc. and Derrick Petroleum Services provide global clients with leading information and research services. Since 2007, the Global M&A Database has tallied more than 7,000 upstream oil and gas transactions including over 4,400 with values disclosed, totaling over $1.2 trillion. This unique database is maintained 24/7 by a team of analysts and are accessible via the web at www.plsx.com/ma.
Source: PLS Inc., Copyright © 2014 by PLS Inc.
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
Sep. 28, 2016 06:15 PM EDT Reads: 250
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
Sep. 28, 2016 06:00 PM EDT Reads: 1,762
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Sep. 28, 2016 05:15 PM EDT Reads: 220
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
Sep. 28, 2016 05:15 PM EDT Reads: 219
The many IoT deployments around the world are busy integrating smart devices and sensors into their enterprise IT infrastructures. Yet all of this technology – and there are an amazing number of choices – is of no use without the software to gather, communicate, and analyze the new data flows. Without software, there is no IT. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the protocols that communicate data and the emerging data analy...
Sep. 28, 2016 05:00 PM EDT Reads: 1,715
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
Sep. 28, 2016 04:45 PM EDT Reads: 359
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
Sep. 28, 2016 04:30 PM EDT Reads: 2,804
Creating replica copies to tolerate a certain number of failures is easy, but very expensive at cloud-scale. Conventional RAID has lower overhead, but it is limited in the number of failures it can tolerate. And the management is like herding cats (overseeing capacity, rebuilds, migrations, and degraded performance). Download Slide Deck: ▸ Here In his general session at 18th Cloud Expo, Scott Cleland, Senior Director of Product Marketing for the HGST Cloud Infrastructure Business Unit, discusse...
Sep. 28, 2016 04:15 PM EDT Reads: 2,428
Whether they’re located in a public, private, or hybrid cloud environment, cloud technologies are constantly evolving. While the innovation is exciting, the end mission of delivering business value and rapidly producing incremental product features is paramount. In his session at @DevOpsSummit at 19th Cloud Expo, Kiran Chitturi, CTO Architect at Sungard AS, will discuss DevOps culture, its evolution of frameworks and technologies, and how it is achieving maturity. He will also cover various st...
Sep. 28, 2016 04:15 PM EDT Reads: 1,863
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Sep. 28, 2016 04:15 PM EDT Reads: 1,485
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
Sep. 28, 2016 04:00 PM EDT Reads: 1,481
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
Sep. 28, 2016 03:15 PM EDT Reads: 354
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Sep. 28, 2016 03:15 PM EDT Reads: 1,308
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Sep. 28, 2016 03:15 PM EDT Reads: 4,144
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Sep. 28, 2016 03:00 PM EDT Reads: 3,868