Finbrook Releases Global Upstream Oil & Gas M&A Review for Q3-2020

By Malavika Sharma
October 07, 2020
2 minutes read
Finbrook Quarterly Report

Finbrook has released its Q3-2020 Global Upstream Oil & Gas M&A Review summary report. 

Aggregate transaction value in the U.S. during the third quarter was driven largely by two significant all-stock mergers announced during the period. Chevron’s all-stock offer to acquire Noble Energy for ~US$13.0 billion (announced in July), and a merger-of-equals between Devon Energy and WPX valued at ~US$11.9 billion (announced in late September) accounted for over 90% of the aggregate deal value for deals announced during Q3. In aggregate, ~US$26.6 billion of deals were announced in the U.S. during the quarter against a 3-year Q3 average of ~US$21.5 billion. A total of 50 deals were tracked by Finbrook during the period. 

Internationally, deal value across seven key regions during the past quarter amounted to just ~US$2.2 billion, more than an 80% drop against the 3-year average for Q3 of ~US$13.2 billion. No international deals in excess of US$500 million were reported during the quarter. The quarterly international deal count stood at 54, with Canadian transactions in particular accounting for over 44% of the aggregate international M&A deal value announced during the quarter.

Top U.S. deals in Q3 (in addition to the Chevron-Noble and Devon-WPX deals) included:

  • Southwestern’s all-stock acquisition of Montage Resources for over US$980 million (including debt).
  • Castleton Resources’ acquisition of ~105,000 Net Acres in North Louisiana from Range Resources for US$245 million (plus contingent payments).
  • Zarvona Energy’s purchase of ~113,000 Net Acres of Midland Basin properties from Approach Resources for ~US$115.5 million pursuant to a bankruptcy sale.

Significant international deals included:

  • ConocoPhillips’ purchase of B.C. Montney assets from Kelt Exploration for US$405 million.
  • Canadian Natural’s acquisition of B.C. Montney-focused Painted Pony Energy for ~C$461 million.
  • Viaro Energy’s acquisition of UK and Dutch North Sea operator RockRose Energy for ~GBP248 million.

The international M&A deal pipeline over the next 3 to 6 months is expected to be driven by significant asset sales programmes led by international majors, as they seek to rationalize their upstream portfolios and continue to focus on reducing operating costs, whilst shifting capital towards renewable energy and decarbonization initiatives. U.S. deal flow is expected to continue to gather pace in Q4, driven by further distressed asset sales and consolidation amongst high-cost unconventional operators. Consolidation amongst international juniors and farm-outs are also expected to gain traction as mid and small-cap players continue to struggle to find new sources of risk capital to fund projects.

To download a copy of the summary report, please click here.

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