Monthly M&A Recap: July Deal Count Drops Sharply, Majors Seek Opportunistic Deals
The month of July saw a sharp drop in international upstream oil & gas deal activity as the negative impact of Covid-19 continued to be felt globally, even as oil prices recovered to over US$40 per barrel.
According to data published in Finbrook’s Monthly M&A Recap for July, an aggregate of ~US$14.6 B worth of deals were announced during the period, largely driven by Chevron’s all-stock offer to acquire Noble Energy for ~US13.0 B (including ~US$8.0 B of debt assumed).
July’s deal count of 53 deals was also significantly lower that the average deal count of ~67 deals per month globally during the first half of 2020, and an average of ~133 per month during H2-2019.
In addition to the Chevron-Noble Energy transaction, significant deals announced during July included:
• ConocoPhillips’ purchase of B.C. Montney assets from Kelt Exploration for US$405.0 MM
• Viaro Energy’s acquisition of UK and Dutch North Sea operator RockRose Energy for ~GBP247.6 MM
• Lukoil’s purchase of Cairn’s 40% non-op. W.I in the RSSD Blocks offshore Senegal for US$300.0 MM
According to industry analysts, the deal pipeline for the remainder of 2020 will continue to be driven by opportunistic acquisitions by the international majors, as mid-caps and junior E&Ps continue to struggle to secure funding at current oil prices and are forced to divest unfunded projects and working interests, or become takeover targets themselves. Any further near-term weakening of oil prices resulting from OPEC+ starting to ease production cuts this month could also impact market sentiment and lead to further distressed sales and bankruptcy situations.
Click here to access the summary report.