Mergers and acquisition (M&A) deal activity in the oil and gas industry declined by 41 per cent in quarter one 2022 in terms of value compared to quarter four 2021, according to GlobalData.
M&A deal activity in the oil and gas industry witnessed a decline in terms of value in quarter one 2022, despite favorable production economics.
The data and analytics company noted that the decline was observed across most regions except China in the Asia-Pacific (APAC) region, where the deal value in quarter one 2022 more than doubled compared to quarter four 2021.
However, China witnessed a fall in the volume of oil and gas deals over this period.
According to GlobalData’s latest report ‘Global M&A Deals in Q1 2022– Top Themes by Sector’, US$59 billion worth of deals were announced in the oil and gas industry in quarter one 2022, a fall of 41 per cent from quarter four 2021.
The count of billion-dollar-plus deals dropped to 11, compared to 26 such deals in the previous quarter.
In quarter one 2022, the upstream sector accounted for around US$21 billion worth of M&A transactions.
The midstream sector recorded over 120 deals in quarter one 2022, attributing to a cumulative deal value of around US$14 billion.
Meanwhile, the downstream sector saw a rise in deal value of 6 per cent in quarter one 2022 when compared to quarter four 2021.
GlobalData oil and gas analyst Ravindra Puranik said: “The shale theme saw a significant number of deals being undertaken in this quarter, following a steady rise in oil prices.
“The most notable among them was the US$6 billion merger of Oasis Petroleum and Whiting Petroleum.
“The merger resulted in a new entity with combined acreage of approximately 972,000 acres in the Williston Basin shale play.
“Similarly, Chesapeake Energy consolidated its position in the Marcellus shale through the acquisition of two companies—Chief E&D and Tug Hill—for a combined value of $2.6 billion.”
In the midstream and downstream sectors, several companies strengthened their positions in emerging markets through M&A in quarter one 2022.
For instance, Fluxys’ and EIG’s joint majority acquisition of GNL Quintero, the operator of Chile’s largest regasification terminal, was one of the prominent deals in the midstream sector.
Another example includes the MOL Group acquiring 417 petrol stations from PKN Orlen, thereby becoming the third largest player in the Polish fuel retailing market with 2,390 filling stations.
Puranik added: “Emerging economies are characterized by rapidly growing national economies that make attractive targets for market expansion.
“These countries tend to exhibit faster energy demand growth, which is met through domestic as well as overseas hydrocarbon sources.
“For instance, Chinese company CNOOC acquired a 5 per cent stake in the Buzios oilfield from Petrobras for US$2.1 billion, to benefit from the growing potential of the pre-salt Santos Basin.”
