This report presents a historical narrative of the global oil and gas upstream M&A activity as revealed by such metrics as deal count, deal value, the quantum of proved reserves up for M&A, and the accompanying segregation by region, deal category, and terrain location of deal asset. The report explores the possibility of adjusting valuation methodologies based on the result obtained.
For this report, a database of M&A transactions which contains 6,444 deals from 2001 to 2017 (Sept.) is utilized. The database is queried for deals for which there is a reported deal value thus allowing M&A deal activity to be tracked, trended, and correlated.
This provides a critical look back on the dynamics of the M&A market to offer an outlook of the M&A deal space. Approximately 77% of the parent database size contains transactions with deal value recorded. The annual M&A deal counts and deal value closely track the oil price trend with correlation coefficients of 76.34% and 65.84%, respectively.
Over seventeen years from 2001, an estimated $2.22 trillion (RT2016) of M&A value has been transacted, 56% of which has been due to transactions primarily in North America, 17% in Russia and the Caspian, 8% in Europe, and 5% in Africa.
Segregating deal value by asset location reveals a contrast between deepwater and onshore. In terms of value, deepwater acquisitions totaled $230 billion (RT2016) globally over the 17-year period, which is only 15% of onshore acquisitions, while the aggregate unit deal value for deepwater at $19.50/BOE (RT2016) is more than 2–times that of onshore acquisitions.
Within the Africa M&A deal space, data shows that deal value is driven primarily by oil price and proved reserve size (in MMBOE), with the greater impact due to the proved reserve size in the target deal where a 10% change each in reserve size and oil price results in 10.74% and 8.53% change in deal value, respectively.
The report presentation can be downloaded here.