to unleash the vast potential of America’s energy resources,”
Other national business associations welcomed the an-
E&Y: Global oil, gas
nouncement. “Today’s news indicates a positive step for-
ward for the Dakota Access Pipeline,” said Karen A. Harbert,
President of the US Chamber of Commerce’s Institute for
21st Century Energy. “It’s encouraging to see how seriously
the Trump administration is taking the need to build energy
infrastructure, which will create jobs, improve our securi-
ty, and keep energy affordable for families and businesses
around the country.”
National Association of Manufacturers Pres. Jay Timmons
noted that the approval is “welcomed news” for manufactur-
ers. “Such investments in America’s energy infrastructure
create tremendous opportunities for the manufacturers who
supply these projects. The construction of the Dakota Access
Pipeline will boost manufacturing across the country.”
deal value climbed
$55 billion in 2016
Global oil and gas deal activity in 2016 increased 14% from
the 2015 level to $395 billion, while deal volume fell 27%
year-over-year, according to Ernst & Young LLC’s global oil
and gas transaction review for 2016. The professional services firm attributes the rise in deal value in large part to
midstream and oil field services megadeals.
“Transactions took a back seat to the more urgent task of
adapting to new economic realities in the sector last year,”
explained Andy Brogan, E&Y global oil and gas transactions
leader. “A number of deals were initiated but not completed
amid ongoing volatility. Now, with the consensus through-
out the sector that the worst is behind us, we’re starting to
see a shift as companies realize that there may be a cost to
inaction. We expect to see the momentum that began in the
fourth quarter of 2016 continue in the year ahead.”
Megadeals, those valued at more than $1 billion, rose
28% year-over-year to 59 in 2016. However, 85 megadeals
took place in 2014.
Upstream deal value fell 14% to $130 billion in 2016
compared with the 2015 level. However, when excluding
the Royal Dutch Shell PLC and BG Group PLC megadeal in
2015, upstream deal activity improved in 2016. The majority of transactions originated in the US, with record Permian
basin deal volumes.
Deal value in North America in 2016 grew 44% from the
2015 level to $76 billion. Activity remained muted in other
geographies as buyers and sellers struggled to bridge the valuation gap, E&Y says.
While recent distress is expected have a lasting impact
on higher-cost geographies like South America, Africa, and
parts of the Middle East and Asia, E&Y expects upstream
deal activity to accelerate as portfolio optimization continues and national oil companies (NOCs) experience pressure
North America dominated midstream transaction activity as well, though continued oil-price volatility slowed the
boom in shale infrastructure projects. Deal volume in the
subsector in 2016 fell 28% from the 2015 level to 93 deals.
Deal value, however, increased 29% year-over-year to $146
billion. E&Y expects a mild resurgence of capital spending
in shale and North American petrochemical and LNG infrastructure projects to lead midstream activity in 2017.
Downstream deal value increased 30% year-over-year in
2016 to $65.9 billion, more than double the average annual
reported deal value of $28.8 billion in the past 5 years. The
subsector saw fewer but larger deals. Two deals valued at
more than $10 billion—by Rosneft PJSC and a consortium
led by Macquarie Group—represented 36% of this total value. Meanwhile, deal volume declined 17% year-over-year to
131 deals. Activity was led by the US and Europe, representing 66% and 65% of total downstream deal value, respectively.
Looking ahead, E&Y sees 2017 as a stronger year for
downstream transactions, with deals motivated by the desire
for upstream and downstream integration to create value, a
strategy downplayed during the period of high oil prices.
Oil field services showed signs of recovery in 2016 with
deal volume declining just 2% year-over-year and deal value
increasing 106% year-over-year to $53 billion in 2016. Continued financial stress and overcapacity is expected to drive
further consolidation in 2017, E&Y says.
Total reported US deal volume in 2016 fell 37% compared
with the 2015 level. Deal value, however, increased 52%
year-over-year to $215 billion in 2016. Average deal value
increased across all sectors in the US.
Deloitte: Oil, gas
M&A activity in 2016
exceeded 2015 levels
Global oil and gas mergers and acquisitions activity rose in
2016 against weak commodities, with deal count and deal
values higher than 2015 levels, according to a recent report
Significant megadeals and sectoral swings pushed the
bar. In 2016, the industry saw seven deals valued at more
than $10 billion—the highest ever. Midstream overtook the
upstream business for the first time in terms of deal value,