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North American deals hit $8.2 billion in first quarter U.S., Canadian mergers and acquisitions more than double from prior quarter Petroleum News Houston Staff
Upstream mergers and acquisitions in the United States and Canada during the first quarter of this year more than doubled to $8.2 billion from $4 billion in prior quarter, leading deal monitor Randall & Dewey to project a strong year for M&A activity worldwide.
In the United States alone, where just $10 billion worth of deals were done in 2002, “it is a good bet that that 2003 transaction activity will surpass the $23 billion level of 2001,” the firm said in a quarterly report released the week of May 3.
Worldwide, $28.3 billion worth of transactions were concluded in the 2003 first quarter versus just $8.7 billion in 2002 fourth quarter, the firm reported. Comparable transactions for all of 2002 totaled $40.7 billion.
Randall & Dewey attributed the first-quarter surge in M&A activity largely to strong oil and gas prices that allowed many companies to clean up their balance sheets and pursue deals. The stronger companies are likely to continue their pursuit “despite the lingering impact of global uncertainties,” the firm said. U.S. deals soar In the United States, upstream deals in the 2003 first quarter soared to $6.6 billion on 37 announced transactions from $3.2 billion on 37 transactions in the 2002 fourth quarter.
There were 11 transactions over $100 million each in the United States that accounted for 92 percent of the quarterly total, according to Randall & Dewey. Most notable: Devon Energy’s acquisition of Ocean Energy, Apache’s acquisition of BP assets in the Gulf of Mexico, and Chesapeake Energy’s acquisition of El Paso Midcontinent properties.
In the United States, where exploration and production companies are particularly active, independents accounted for 90 percent of the buyer activity and 76 percent of the seller activity during the 2003 first quarter. In contrast, integrated companies accounted for only 4 percent of seller activity. However, while independents led the U.S. market in buyer and seller activity, they accounted for only $888 million on the buyer side, Randall & Dewey noted. Other segments of the oil and gas industry, such as the midstream and downstream sectors and the integrateds were all net sellers “reflecting the industry’s focus on portfolio trimming and the sales of lower-margin properties,” the firm said. Canadian activity also up In Canada, Randall & Dewey reported 34 first-quarter transactions totaling $1.6 billion compared to 37 deals totaling $800,000 in the prior quarter.
Among the larger transactions was EnCana’s $704 million sale of assets to Canadian Oil Sands Trust. For all of 2002, there was $9.4 billion worth of deals on 133 reported transactions, the firm said.
Outside North America, there were $10.1 billion in deals on 19 transactions during the first quarter compared to $4.7 billion in deals on 11 transactions in the prior quarter, according to Randall & Dewey.
The lion’s share of the first-quarter total was attributed to BP’s $6.1 billion share purchase of Tyumen Oil. For 2002, there were 63 announced transactions totaling $14.5 billion.
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