2013 Energy M&A activity
2012 was a record breaking year for M&A activity in the energy industry. Driven by high oil prices, depressed NG prices, political uncertainty at home, and emerging economies abroad, total value of about 67 energy M&A deals was $254B, easily surpassing a previous 2010 record of $212B. Three headliners made up almost 40% of the activity:
1) TNK-BP to Rosneft - $62B
2) CNOOC's purchase of Nexen - $18B
3) Freeport-McMoran's purchase of Plains Exp. - $17B
So what do you think, more or less activity in 2013?
Might be hard to beat $254B just because of the extremely large value tied to the TNK-BP sale ($62B), but in my opinion, energy M&A activity over the next 5 years is on a steady increase upward.
All the Super Majors were WAY late to the unconventional tight gas & shale party, which is just incredibly massive. I see the super majors wanting to get a piece of the unconventional gas, and to get in, they are going to have to do it through M&A now. Not only that, all these small independents will have major capital expenditures required to even begin to develop and infill drill their acreage positions, and would probably find it pretty comforting to team up with a Major for access to their deep pockets.
I think we are already seeing the start of this with the Exxon-XTO deal and KKR's Samson deal.
Agreed, the Russian deal was one of a kind. However, we could see more foreign investment in the North American shale plays. NG prices will maybe be the most important factor for M&A in the unconventional plays. LNG exportation is a huge factor in this. (I am bullish on NG for the record) Side note: Mitsubishi just pumped a ton of money into EOG to facilitate the exploration of the Tuscaloosa Marine Shale.
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