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Mergers & Acquisitions and Financing Trends in Oil & Gas Industry Q2 2009
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
Global |
Published |
22 July 2009 |
Number of Pages |
55 |
- |
|
Publisher |
GlobalData |
Increased Deal Activity In The Oil & Gas Industry In Q2 2009
The "M&A and Financing Trends in Oil & Gas Industry Q2 2009" report is an essential source of data and trend analysis on the mergers and acquisitions and financings in the oil and gas industry. The report provides detailed information on M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnership transactions registered in the oil and gas industry in Q2 2009. The report portrays detailed comparative data on the number of deals and their value in the last five quarters subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top private equity, venture capital, and advisory firms in the oil and gas industry.
Data presented in this report is derived from GlobalData’s proprietary in-house Energy eTrack deals database and primary and secondary research.
The Number of Deals In The Oil and Gas Industry Increased By 44%, While Investments Decreased By 11% In Q2 2009
The number of oil and gas deals increased by 44% from 457 deals in Q1 2009 to 657 deals in Q2 2009. This was primarily driven by a steady rise in oil prices and the uncertain market conditions creating opportunities for consolidation activities in the oil and gas sector. However, the value of investments decreased considerably to reach US$119 billion in Q2 2009, compared to US$134 billion in Q1 2009. The average and median value of deals in the oil and gas industry has seen a considerable decrease, reporting $509 million and $53 million respectively in Q2 2009, compared to $651 million and $90 million in Q1 2009.
Mergers & Acquisitions In The Oil And Gas Industry Leaped By 25% In Q2 2009
Mergers and acquisitions in the oil and gas industry witnessed an increase of 25% to reach 321 deals in Q2 2009 from 257 deals in Q1 2009. The increase was primarily due to the pursuance of growth options by major oil companies; independents divesting their non-core assets in order to focus capital spending on core assets; and companies combining for survival. M&A investments also increased marginally from $42 billion in Q1 2009 to $43 billion in Q2 2009, owing to a string of smaller asset and corporate deals. However, the average size of M&A deals decreased from $396 million in Q1 2009 to $255 million in Q2 2009. Sinopec’s proposed acquisition of Addax Petroleum for $7.17 billion was one of the big-ticket M&A deal registered in Q2 2009.
The average P/E of acquired oil and gas companies, which reflects the willingness of the investors to pay for a company’s earnings increased from 6 times in Q1 2009 to 11 times in Q2 2009. This indicates that investors are anticipating higher earnings growth in the oil and gas industry in the short run.
According to Swati Singh, Analyst, "M&A activity in the Oil & Gas industry will continue to increase in the coming months driven by above $60 crude oil price and stable financial markets. The asset and company valuations are still fairly attractive and the cash rich companies are expected to leverage on this opportunity to build their capacities and expand geographically. National Oil Companies (NOCs) had been the key acquirers during the last six months; however we expect that the leading integrated and independent E&P companies will also start expanding inorganically in the next few months."
Oil And Gas Asset Valuations Decreased
Oil and gas asset valuations declined by 24% in Q2 2009, because of volatility in oil prices and wider consolidation activities. The average deal implied value for acquisition and asset transactions tumbled from $65,813 per Boe of daily production in Q1 2009 to $50,234 per Boe of daily production in Q2 2009, with the market turmoil providing acquisition opportunities for the cash-rich players to buy distressed companies/assets at lower value. On a year-on-year basis, oil and gas asset valuations fell by 41% in Q2 2009 from $85,752 per Boe of daily production in Q2 2008. Additionally, the value of proved or 1P reserves decreased by 4% to reach $12 per Boe and 2P reserves decreased by 8% to reach $9 per Boe in Q2 2009.
Increased Financing Through Debt Offerings
Debt offerings, including secondary offerings and private placements, became the most prominent among all financing activities in the oil and gas market with over $59 billion raised in Q2 2009, compared to $37 billion in Q2 2008. The increase in investments can primarily be attributed to major companies like Eni, Gas Natural, ConocoPhilips, and Statoil Hydro raising over $9 billion in public debt offerings. Furthermore, equity offerings, including IPOs, secondary offerings, and private placements, decreased from $28 billion in Q1 2009 to $16 billion in Q2 2009. On a year-on-year basis, equity capital decreased by 12.5% in Q2 2009 from $18 billion in Q2 2008.
According to Swati Singh, Analyst, "Leading oil and gas companies have been raising capital to fund their expansion and growth strategies. Debt has been the preferred choice of companies as the interest rates are quite low and the equity markets are still recovering from the financial crisis. While some large companies are using the debt proceeds to fund their expansion plans, many companies are also rebalancing their debt portfolios and are raising low interest long term debt to repay some of the outstanding higher interest debt that is due for maturity in the near future. However, by the end of 2009 or early 2010, we expect the oil and gas companies to rely a lot more on the equity markets for additional capital requirements."
Increased Private Equity Investments In Q2 2009
Private equity investments in the oil and gas industry registered a rapid increase in the second quarter of 2009, despite the global financial meltdown. Oil and gas companies raised over $440 million in Q2 2009, representing an increase of 198% over Q1 2009. One of the major deals that squeezed out private equity funding in Q2 2009 was East Resources, Inc., an oil and gas exploration and production company, which received $350 million from Kohlberg Kravis Roberts & Co. L.P., a private equity firm.
Investments Surge In North America And Asia-Pacific
Oil and gas investments in North America and Asia-Pacific held up very well throughout Q2 2009 despite the credit crunch and weathering grim economic conditions. The interest in deal making remained strong in these two continents, with North America recording investments of over $68 billion in Q2 2009, compared to $54 billion in Q1 2009; and Asia-Pacific attracting investments of over $12 billion in Q2 2009, compared to $11 billion in Q1 2009. Moreover, Europe recorded a decline of 29% in investments to reach $36 billion in Q2 2009. The demand for investments in the oil and gas market has dropped in Q2 2009, as the region is pursuing energy-efficiency initiatives.
Mergers & Acquisitions and Financing Trends in Oil & Gas Industry Q2 2009
Summary
The Quarterly Oil & Gas M&A and Financing Trends Report Q2 2009 is an excellent source providing detailed information on M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnership transactions in the Oil & Gas industry. The report provides detailed comparative data on the number of deals and their value in the last four quarters subdivided by deal types, segments, and geographies. It also provides information on the top private equity, venture capital, and advisory firms in the Oil & Gas industry.
Scope
- Review of deal trends in upstream, midstream, downstream, and equipment & services segments
- Analysis of M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnerships in the oil and gas industry
- Summary of oil and gas deals globally in the last five quarters
- Information on top deals happened in the industry
- Geographies covered include – North America, Europe, Asia Pacific, South & Central America, and Middle East & Africa
- League tables of financial advisors in M&A and equity/debt offerings. This includes key advisors such as Morgan Stanley, Credit Suisse, and Goldman Sachs
- Review the financial metrics, such as operating profit ratio, P/E ratio, and EV/EBITDA on mergers and acquisitions
Reasons to buy
- Find out the major deal performing segments for investments in your industry
- Evaluate type of companies divesting / acquiring and ways to raise capital in the market
- Do deals with an understanding of how competitors are financed, and the mergers and partnerships that have shaped the oil and gas industry
- Identify major private equity/venture capital firms that are providing finance in the oil and gas industry
- Identify growth segments and opportunities in each region within the industry
- Look for key financial advisors where you are planning to raise capital from the market or for acquisitions within the industry
- Identify top deals makers in the oil and gas industry
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