Where Most 2017 Energy M&A Deals Took Place
Permian was the ringleader
As we have been discussing, merger and acquisitions in 2017 in the oil and gas industry have largely occurred in the Permian, and mostly in the upstream sector. 86% of the M&A deals in the energy sector this year, including the mammoth EQT (EQT)-RICE Energy (RICE), ExxonMobil (XOM)-Bass family deals, were in the Permian Basin.
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According to a more detailed analysis by PricewaterhouseCoopers (or PWC), the Permian accounted for 20 deals valued at $21.4 billion in 1Q17, while 2Q17 saw 11 deals valued at $4.5 billion in the region.
Because of the Permian’s low break-even costs and high IRRs (internal rates of return), producers scooped up prime acreage that could produce at a profit even as crude oil prices stayed low. According to PWC, the total values of the deals that took place in the Permian in 1Q17 and 2Q17 stood at $21.4 billion and $4.5 billion, respectively, bringing the total to ~$26 billion.