GlobalData: Value of upstream M&A nosedives in March

Merger and Acquisition (M&A) values in the upstream oil and gas sector dropped significantly to $829.8 million in March 2015, compared with $2.9 billion in the previous month, according to research and consulting firm GlobalData.

The company’s latest monthly upstream deals review states that oil and gas companies spent most of their capital on acquiring Americas-based companies, announcing a total of $703.7 million in March 2015.

The top deal of the month was Whitecap Resources’ agreement to acquire Beaumont Energy for $459.8 million. Beaumont holds interests in oil and gas assets in western Canada. The assets have current production of 5,100 barrels of oil equivalent per day, comprised of 97% oil and natural gas liquids.

Matthew Jurecky, GlobalData’s Head of Oil & Gas Research and Consulting, says that deal flow has gradually been slowing since June 2014, with the slowest quarter in years registered in Q1 2015.

Jurecky continues: “M&A deal volume was down again with only 10 deals announced in March 2015, compared with 11 in February 2015. While the Shell-BG merger will have a positive impact next quarter in terms of the total value of deals announced, the number of deals will remain low.”

GlobalData’s review also states that financing through equity and debt offerings, private equity, and venture financing totaled $30.6 billion from 78 deals in March 2015, an enormous increase from the previous month’s total of $12 billion.

The majority of investments came from the debt offerings market, which accounted for 70% of the total investment, at $21.4 billion in March 2015. This is a substantial increase from $7.5 billion in February 2015.

In terms of the number of deals, equity offerings accounted for 60% of the total, with 47 in March 2015.

Jurecky concludes: “More capital was raised in March than in any month of the last year, and debt markets continue to register high levels of activity.  Increasing levels of debt could eventually prove challenging for some, should low crude oil prices continue much longer.”
 

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