Oil and gas deals in the E&P sector reached $73 billion in the 4th quarter of 2010 with deals for the year totalling $238 billion, compared with $151 billion in 2009.
The total deal value in the last quarter of this year is second only to Q3 2010 in recent years, even outscoring Q4 2009 - a quarter that included ExxonMobil’s $41 billion acquisition of XTO Energy. That’s according to an analysis of Evaluate Energy’s in-depth M&A database.
At least four key trends emerge from the pattern of oil and gas deals in 2010:
- A marked shift in Chinese activity away from Africa towards the Americas.
- A growing interest in shale plays containing liquids and some interesting new innovative approaches to monetising shale resources, prompted by the widening gap between gas and oil prices.
- A trend towards taking companies private
- The nearing completion of a dramatic series of divestitures by BP
China Shifts Acquisition Focus to the Americas
Following a quarter of inactivity in Q3 2010, Chinese state companies satisfied their appetite for foreign assets with a flurry of deals in Q4 2010, ending the year with a total of $31 billion in E&P acquisitions. This compares with a total of $19 billion spent by Chinese companies on E&P assets in 2009. In this time the Chinese government has been agnostic towards the location of their acquisitions, with major deals being conducted across 14 different countries. Whilst Africa was the main focus of acquisitions in 2009, Canada and South America dominated China’s deals in 2010, accounting for 8 of the top 10 deals by Chinese companies during the year. Amongst the key drivers of deal value during the fourth quarter was the spending by Chinese companies in Latin America. The largest deal of the quarter came from Sinopec acquiring a 40% stake in Repsol Brasil for $7.1 billion and gaining a foothold in the increasingly popular Brazilian offshore pre-salt reserves. This sector is about to undergo major development with the massive $43 billion deal by Petrobras and consequent financing paving the way for a development charge. The second largest deal of the quarter came from the acquisition by Bridas Corp (50% owned by CNOOC) of BP’s 60% stake in Pan American Energy, the second largest oil and gas producer in Argentina for $7 billion. Sinopec added further to China’s Argentinean assets by acquiring Occidental’s Argentinean E&P portfolio for…