Oil and Gas Industry Leads in 2012 M&A Activity
ThinkstockThe oil and gas industry increased its mergers and acquisitions deals in 2012 by 38% over 2011, according to Dealogic. M&A activity totaled $348 billion in 2012, the industry’s highest total since at least 2000. The largest deal in the…
The oil and gas industry increased its mergers and acquisitions deals in 2012 by 38% over 2011, according to Dealogic. M&A activity totaled $348 billion in 2012, the industry’s highest total since at least 2000.
The largest deal in the United States was the ConocoPhillips (NYSE: COP) spin-off of its refining and marketing business to Phillips 66 (NYSE: PSX) in a deal worth about $21 billion. The biggest deal of all involved Russia’s OAO Rosneft, which paid a total of $54.4 billion for TNK-BP, a troubled joint venture between Russian oligarchs and BP PLC (NYSE: BP).
Investment bankers prospered as well. The Wall Street Journal reports that Barclays PLC (NYSE: BCS) worked on more than 30% of the oil and gas industry deals. Citigroup Inc. (NYSE: C) and Credit Suisse AG (NYSE: CS) filled out the top three.
In addition to M&A, debt issues were robust in 2012. Dealogic reports that debt issuance rose 62% year-over-year in 2012 to a total of $251 billion. The biggest deal of the year — $7 billion — was scored by Brazil’s Petroleo Brasileiro S.A. (Petrobras) (NYSE: PBR). Phillips 66 raised $5.8 billion and Chevron Corp. (NYSE: CVX) raised $4 billion in other big deals. Citigroup and J.P. Morgan Chase & Co. (NYSE: JPM) led the banks involved in debt sales.
With interest rates at rock-bottom, it is no big surprise that oil and gas companies either refinanced old debt or sought new debt. That is only smart.
The M&A activity jumped because industry players are seeking to align themselves for the coming North American shale oil and gas boom. Some companies, like BP and Chesapeake Energy Corp. (NYSE: CHK), are selling off assets to address specific issues unique to each. But most are jockeying for liquids-rich leases in the major U.S. shale plays.
That jockeying should continue into next year, led by Cnooc Ltd.’s (NYSE: CEO) takeover of Canada’s Nexen Inc. (NYSE: NXY) for $15.1 billion. This one deal could start a new round of Chinese investment and buyouts in North America, particularly in the United States. Things are just starting to get interesting.
Paul Ausick
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
