HOUSTON — Uncertainty about oil and gas prices led energy companies to avoid big ticket transactions in 2013, tending toward smaller deals, according to a new study.
The value of global mergers and acquisitions announced in the industry declined to $337 billion last year, a 20 percent drop from 2012, according to an EY study on global oil and gas transactions.
Companies probably put a number of potential transactions on hold until future oil and gas patterns become clearer, wrote Andy Brogan, EY’s global oil and gas transaction advisory services leader.
But these delays also mean a record number of potential buys may be waiting in the wings.
“As a result, the inventory of assets either officially or unofficially on the market has reached historically high levels,” Brogan said in a written statement.
The total number of oil and gas transactions dropped in 2013 to just under 1,400 transactions from a little more than 1,800 transactions in 2012.
Upstream transactions accounted for about 70 percent of deal activity in 2013, the EY report said. Meanwhile, downstream deals were particularly hard hit. There were only 109 downstream deals announced in 2013, with a total value of about $14 billion, down from $47 billion in 2012.
The Eagle Ford was the most popular location for upstream transactions, attracting $8.8 billion in upstream oil and gas deals in 2013. It was also the site of the largest energy deal of 2013, Devon Energy’s $6 billion Eagle Ford land grab announced in November.
In West Texas, unconventional regions of the Permian Basin generated $7.5 billion in new deals in 2013.
Midstream deals were the brightest sector in the industry, growing to $70 billion in deal value, up from $60 billion in 2012. Part of this growth was driven by the master limited partnership corporate structure that many pipeline companies use, which relies on acquisitions for its growth, the EY report said.
Brogan said investment growth in the midstream sector likely will continue as long as more traditional investments offer relatively low interest rates.
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.]