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Oil and Gas Mergers US Oil and Gas Mergers Boom as Companies Adapt to Price Changes

| Editor: Dominik Stephan

The deal activity in the US oil and gas industry accelerates significantly during 2015: As companies try to adapt to the oil price slack especially upstream deals are in high demand.

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U.S. Oil & Gas deal activity accelerates during second quarter of 2015, according to PWC.
U.S. Oil & Gas deal activity accelerates during second quarter of 2015, according to PWC.
(Picture: Daniel Sinoca (CC0))

Midstream transactions drove oil and gas strategic dealmaking efforts in the second quarter of 2015 as companies adapt their operations and business objectives to the lower oil price environment, market analysts Pricewaterhouse Coopers (PWC) found out. In total, mergers and acquisitions (M&A) in the oil and gas industry increased in the second quarter of 2015 from the prior quarter, driven by midstream transactions from corporate buyers.

During the sequond qarter of 2015, there were a total of 47 oil and gas deals (with values greater than US $ 50 million) accounting for US $ 38.8 billion, compared to 39 deals worth $34.5 billion in the first three months of the year, and 65 deals worth US $ 48.9 billion in the second quarter of 2014.

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The number of deals in the midstream segment jumped 110 percent while value increased 130 percent compared to the second quarter of 2014. There were 21 midstream deals, or 44 percent of total deal activity, contributing US $ 27.7 billion in value. Additionally, master limited partnership (MLP) dropdowns and affiliate transactions generated 38 percent of the midstream transactions totaling US $ 19.5 billion in the second quarter of 2015.

Oil Price Environment Continues to Push Upstream Deals to the Sidelines

“Interest in the midstream sector drove second quarter deal volume and value as corporate buyers pursued opportunities to grow their gathering and transportation operations as U.S. onshore production continued to increase despite the low oil and gas price environment,” said Doug Meier, PWC’s US energy sector deals leader.

“Going forward, we’ll see activity continue as businesses realign their strategies to the current oil price realities.”

There were 32 corporate deals worth US $ 34.2 billion versus 15 asset deals worth US $ 4.6 billion in the second quarter of 2015. Corporate deals represented 68 percent of the total deal volume and 88 percent of the total deal value, which included three midstream megadeals (deals valued over US $ 1 billion) in the quarter. Overall, there were five megadeals worth US $ 25.9 billion, representing 67 percent of total deal value in the quarter.

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