HOUSTON – Oil and gas producers worldwide bought fewer assets in 2013, bringing merger and acquisition activity to its lowest level in five years, according to a new study.
Deals to buy companies and assets dropped to $136 billion, down 46 percent from 2012. That year, upstream companies across the globe struck $250 billion in deals, the highest point in a decade, according to an IHS energy M&A research report released Thursday.
In 2013, energy companies instead funneled their money into developing their huge stockpiles of reserves and acreage.
“There’s such a huge inventory of reserves that need to be developed” after oil and gas companies spent $600 billion on deals from 2010 to 2012, said Chris Sheehan, director of energy M&A research at IHS, in an interview Friday. “It’s a global dynamic.”
Buyers and sellers also remained disconnected on price expectations throughout the year, though deal activity ramped up in the second half of 2013 as political and economic uncertainties began to clear, Sheehan said.
Though Chinese state-owned companies spent less in 2013, they snapped up property in the Caspian region, in North America and in Africa and accounted for a larger percentage of the year’s oil and gas buyers than in 2012 because of the overall drop in deal activity. India’s state-owned oil companies followed China closely as the second-largest buyer, Sheehan said.
Foreign buyers bought fewer new assets in North America, where much of the board is set after an American land rush that lasted until 2012. IHS said producers snapped up a record $200 billion worth of unconventional assets between 2010 and 2012, but that spending was slashed in half last year to $40 billion.
Sheehan said IHS will release a report in March forecasting M&A trends in 2014.
Also on FuelFix:
Top 10 deals of the US energy boom
Nati Harnik / AP
10. $9.2 billion
In March 2011, Berkshire Hathaway announced plans to buy Wickliffe, Ohio-based specialty chemicals company Lubrizol in an all-cash deal.
[photo: Warren Buffet, chairman and CEO of Berkshire Hathaway]
9. $9.3 billion
In June 2011, Dallas-based Energy Transfer Equity announced plans to buy Houston’s Southern Union Co. in a stock deal, creating one of the largest natural gas pipeline companies in U.S.
[photo: The Travis Tower, or 1300 Main, in downtown Houston was purchased by Dallas-based Energy Transfer Partners in August 2011.]
8. $10.2 billion
In April 2011, Exelon Corp. agreed to buy Constellation Energy Group Inc. in a stock deal led by CEO John
Rowe, then the longest-serving utility CEO in the country.
[photo: Then- Exelon Corp. CEO John Rowe]
Plains Exploration and Productio
7. $10.2 billion
In December 2012, global mining powerhouse Freeport-McMoRan Copper & Gold Inc. announced plans to buy Plains Exploration and Production Co. in a cash and stock deal, making a big and risky jump into the oil and gas business.
[photo: A Plains Exploration and Production Co. worker retrieves data from a well in the Inglewood oil field in Los Angeles.]
Isaac Brekken / Getty Images for National Clean
6. $10.4 billion
In May 2013, Berkshire Hathaway’s MidAmerican Energy utility announced plans to buy Nevada electric and natural gas company NV Energy in a cash deal that expanded the footprint of Warren Buffet's company in the energy sector.
[photo: NV Energy President and CEO Michael Yackira speaks during the National Clean Energy Summit 6.0 at the Mandalay Bay Convention Center on August 13, 2013 in Las Vegas, Nevada.]
TOM REEL / San Antonio Express-News
5. $12.3 billion
In February 2010, oil field services giant Schlumberger announced plans to buy Houston-based drill bits maker Smith International in an all-stock merger.
[photo: In 2012, Robert Drummond, President of Schlumberger North America, (left) talks about his company as Jeremy Aumaugher, South Division Operations Manager,listens.]
Jake Lacey / Jake Lacey
4. $14.9 billion
In July 2011, BHP Billiton announced plans to buy Petrohawk Energy Corp. in an all-cash deal that made the Australian company a bigger player in U.S. onshore energy production.
[photo: A Petrohawk Energy Co. drilling site at the Eagle Ford Shale in McMullen County, Texas.]
Nell Redmond / AP
3. $25.5 billion
In January 2011, Duke Energy Corp. announced plans to buy its North Carolina rival Progress Energy Inc. in a stock deal that would create one of the nation's largest utilities.
[photo: Duke Energy's Charlotte, N.C. corporate headquarters in Feb. 1, 2006]
2. $37.6 billion
In October 2011, Kinder Morgan announced plans to buy El Paso Corp., a Houston-based natural gas producer and pipeline owner in a cash and stock deal. The acquisition encountered regulatory challenges, but eventually created the nation's largest network of pipelines.
[photo: Rockie Express Pipeline]
Matt Nager / Bloomberg
1. $41.4 billion
In December 2009, Exxon Mobil announced plans to buy Fort Worth, Texas-based XTO Energy in a stock deal, making a major bet on the future of natural gas. Exxon Mobil is now the largest producer of natural gas in North America.
[photo: A flag flies otuside the headquarters building of XTO Energy Inc. in Fort Worth, Texas, U.S., on Monday, Dec. 14, 2009.]