Top five energy deals
Merger and acquisition (or M&A) activity in the oil and gas sector has been in high gear in 2017, especially in the first quarter and in the upstream sector. Dealmakers had been encouraged by recovering commodity prices (USO) (DBO) (UNG) (UGAZ) driven by OPEC’s agreement in 4Q16 to curtail production.
Another factor that likely bolstered the M&A activity this year was the beginning of the Trump administration, which many E&P players believed would be favorably disposed to the oil and gas sector. Let’s look at the top five oil and gas deals in the energy sector by deal size so far this year.
In contrast to the Permian rush that had been evident since late last year, the largest deal in 2017 has the Marcellus at its core. Earlier in June, EQT Corporation (EQT) had announced that it intended to acquire Rice Energy (RICE) for approximately $6.7 billion. The transaction is expected to close in 4Q17. However, not everyone seems to be happy with the deal going through. Hedge Fund D.E. Shaw recently joined Jana Partners in urging EQT to split its business into separate upstream and midstream businesses. Activist hedge fund Jana Partners wants the companies to scrap the deal altogether.
Ranking second by deal value size is ExxonMobil’s (XOM) $6.6 billion purchase of the Bass family companies. These companies held an acreage position of 250,000 net acres in the Permian Basin with estimated resources of 3.4 billion barrels of oil equivalent.
Parsley Energy-Double Eagle Energy
In February this year, Parsley Energy (PE) had announced that it had agreed to acquire 71,000 net acres in the Midland Basin, located within the larger Permian Basin, from Double Eagle Energy Permian for $2.8 billion.
Noble Energy-Clayton Williams
In January, Noble Energy (NBL) announced that it would acquire Clayton Williams Energy for $2.7 billion. According to the company, it now holds the second-largest Southern Delaware Basin acreage position. The transaction closed in April this year.
Sanchez Energy-Anadarko Petroleum
Again in January, Sanchez Energy (SN) and Blackstone Energy Partners acquired Anadarko Petroleum’s (APC) Eagle Ford properties for $2.3 billion. Sanchez and Blackstone split the acquisition cost paying 50% each.
As we can see, three of the top five deals in the oil and gas sector took place in the Permian. We’ll discuss this in more detail in the following part of this series.