HOUSTON, March 5 /PRNewswire/ -- PLS, Inc. with itsinternational partner Derrick Petroleum Services and further analysisfrom Rystad Energy report, despite a difficult economic cycle, GlobalUpstream M&A activity for oil and gas deals in 2009 totaled $153billion and surpassed the pre-crash levels in 2007. According to BrianLidsky, Managing Director of Houston-based research, transactions andadvisory firm PLS, Inc., "Despite the recovery in the totaldollar amount of Global oil and gas deals in 2009, the markets have notyet fully recovered as tracked by the number of actual transactionsabove the $100 million mark, which came in at 124 in 2009 versus 160 in2008 and 168 in 2007. Furthermore, the 2009 market is characterized bynew buyers and new assets, a trend we believe will continue in 2010 andbeyond."
Oil and gas valuations globally, based on an evaluationof the $100 million plus deal market and prices paid per 2P entitlementreserves, ended 2009 at the $14.40 per BOE level, up 40% from a troughnumber of $10.20 per BOE seen in Q1 2009 but down from the $20.90 perBOE peak seen in Q1 2008. In the U.S., valuations for 1P oil reservesended the year at about $14.10 per barrel, down 25% from the 2008 peak.For 1P gas reserves, values ended 2009 at about $1.80 per Mcf, down40% from the 2008 peak.
The oil and gas deal markets haveshifted to a new paradigm and new asset types - namely unconventionaloil and gas production primarily sourced from gas shales, tight gassands and oil sands. This asset classgarnered 45% of the market in 2009, up dramatically from just 9% in2007.
On the buyer side, foreign National Oil Companies("NOC's") and Government-backed entities represented 50% of all dealsgreater than $1 billion in 2009; also marking a shift to a new buyerprofile in the oil and gas markets. The traditional majorinternational oilcompanies ("IOC's") had limited activity, but when active the IOC'sfocused on unconventional assets. A prime example was ExxonMobil's$41 billion purchase of U.S. independent XTO Energy.
Interestingly,$35 billion of the $153 billion in 2009 is classified as cross-bordertransactions. According to Yashodeep Deodhar, President of DerrickPetroleum Services, "The Chinese NOCs clearly are on a global buyingspree, having accounted for 45% of the deal value in cross-border deals.In 2009 alone, China spent $16 billion gaining footprints inCanadian oil sands, the Gulf of Mexico, Nigeria, Gabon, Trinidad andTobago, Ecuador, Syria, Iraq, Iran, Indonesia and Kazakhstan."Following China in cross-border deals are the European majors (primarilyinto the U.S. shales, $5.6 billion) and Korea (3 deals, $5.25 billion).
Dissecting the oil and gas markets even further reveals anothermarket shift in 2009. Pure asset deals accounted for 28% of thevolume in 2009, down markedly from 65% in 2007. Volatility in oil andgas prices and economic conditions early in 2009 drove this shift ascompanies found it more effective to buy entire companies rather thanattempt to complete a deal where both buyer and seller could agree onthe price of an as
In terms of emerging trends, Africacontinues to be a growing area of interest for buyers with its share ofthe global market growing to 14% in 2009, up from 5% in 2007.According to Anders Wittemann, Consulting Manager with Rystad Energy,"Hess and Shell's cross-border swap of North Sea and Gabon assets,valued by Rystad Energy at $2.9 billion, ranks the deal at the #9 spotfor 2009. This is a unique example of portfoliomanagement driving strategic and operational goals. Hess is aglobal leader in cross-border asset swaps and both companiesdemonstrated persistence and flexibility through this transaction."
Accordingto Lidsky, "Looking forward, we currently have more than $46 billion ofdeals on the market and have already transacted $18 billion in thefirst two months of 2010. For perspective, in May 2009, we only had$20 billion of deals on the market. The markets are well supplied -particularly on the asset side. The difficult cycle the industry iscoming out of requires managers to laser focus on execution andstrategy."
Drivers for oil and gas M&A deals in 2010include, (1) North American companies focusing on resource plays anddivesting conventional and/or cash flowing assets, (2) capital needs forworld class development projects, and (3) normal portfolio balancingand risk management.
For more on the 2009 Study or the M&ADatabase, please contact PLS, Inc. at (713) 650-1212.
PLS, Inc. and Derrick Petroleum Services are partners inproviding U.S., Canadian and International clients with leading M&Aand E&P databases and services.
PLS, Inc. is a leading industry research, transactions andadvisory firm based in Houston, Texas.
Derrick PetroleumServices is an independent oil and gas research and consulting firm withspecial emphasis on emerging plays and transactions internationally.
RystadEnergy is an independent and integrated E&P advisory and businessintelligence data firm offering global database applications,stand-alone research products and strategy consulting services.
For more information:
Contact Brian Lidsky at PLS, Inc. at 713-650-1212 or email forfurther inquiries or to access and subscribe to the M&A database and2009 Study.
SOURCE PLS, Inc.