GLOBAL OIL&GAS DEALS
OGFJ - Global oil and gas deal activity in 2016 recovered from a slow start to the year with help from the announcements of midstream and oilfield services (OFS) megadeals. According to the EY Global oil and gas transaction review 2016, deal value increased in 2016 to US$395 billion from US$340 billion in 2015, while deal volume fell by 27% year-on-year.
Andy Brogan, EY Global Oil & Gas Transactions Leader, said: "Transactions took a back seat to the more urgent task of adapting to new economic realities in the sector last year. A number of deals were initiated but not completed amid ongoing volatility. Now, with the consensus throughout the sector that the worst is behind us, we're starting to see a shift as companies realize that there may be a cost to inaction. We expect to see the momentum that began in the fourth quarter of 2016 continue in the year ahead."
Upstream deal value fell 14% to US$130 billion in 2016 compared to US$153 billion in 2015. However, when excluding the Royal Dutch Shell and BG Group megadeal in 2015, upstream transaction activity improved in 2016. The majority of transactions originated in the US, with record Permian basin deal volumes. Deal value in North America exceeded US$76 billion in 2016 compared to US$43 billion in 2015. Activity remained muted in other geographies as buyers and sellers struggled to bridge the valuation gap.
While recent distress is expected have a lasting impact on higher-cost geographies, like South America, Africa and parts of the Middle East and Asia, upstream deal activity is expected to accelerate as portfolio optimization continues and national oil companies (NOCs) experience pressure from cutbacks.
North America dominated midstream transaction activity as well, though continued oil price volatility slowed the boom in shale infrastructure projects. Deal volume in the sub-sector fell 28% to 93 deals in 2016 compared to 105 in 2015. Deal value, however, increased by 29% to US$146 billion year-over-year. A mild resurgence of capital spending in shale and North American petrochemical and LNG infrastructure projects is expected to lead midstream activity in 2017.
Downstream deal value increased by 30% in 2016 to US$65.9 billion from US$51.5 billion in 2015 – more than double the average annual reported deal value (US$28.8 billion) in the past five years. The sub-sector saw fewer but larger deals. Two deals valued at more than US$10 billion – by Rosneft and a consortium led by Macquarie – represented 36% of this total value. Meanwhile, deal volume declined by 17% to 131 deals from 142 in 2015. Activity was led by the US and Europe, representing 66% and 65% of total downstream deal value, respectively.
Looking ahead, 2017 is expected to be a stronger year for downstream transactions, with deals motivated by the desire for upstream and downstream integration to create value – a strategy downplayed during the period of high oil prices.
OFS showed signs of recovery with deal volume declining by just 2% and deal value increasing 106% to US$53b in 2016. Continued financial stress and overcapacity is expected to drive further consolidation in 2017.
Brogan said: "This year promises to mark a continuation of the transition from survival to value creation in the global oil and gas sector. Companies are very firmly focused on delivering value but as investor attitudes change this will inevitably bring growth back into the picture. If capital availability and the valuation gap between buyers and sellers improves alongside a stable oil price, it should be an interesting year for transactions."
|June, 22, 13:40:00|
|June, 22, 13:35:00|
|June, 22, 13:30:00|
|June, 22, 13:25:00|
|June, 22, 13:20:00|
|June, 22, 13:15:00|
U.S. EIA - Venezuela holds the largest oil reserves in the world, in large part because of the heavy oil reserves in the Orinoco Oil Basin. In addition to oil reserves, Venezuela has sizeable natural gas reserves, although the development of natural gas lags significantly behind that of oil. However, in the wake of political and economic instability in the country, crude oil production has dramatically decreased, reaching a multi-decades low in mid-2018.
U.S. BEA - The U.S. current-account deficit increased to $124.1 billion (preliminary) in the first quarter of 2018 from $116.1 billion (revised) in the fourth quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.5 percent of current-dollar gross domestic product (GDP) in the first quarter, up from 2.4 percent in the fourth quarter.
WNN - There are 126 operational power reactors in 14 EU Member States, providing more than one-quarter of the bloc's total electricity production. In its Communication on the Nuclear Illustrative Program (PINC) published last year, the European Commission expects nuclear to maintain its significant role in Europe's energy mix up to 2050. This would require investment of some EUR40-50 billion (USD46-58 billion) in nuclear LTO by 2050.
REUTERS - Benchmark Brent crude LCOc1 was up 50 cents at $75.58 a barrel by 0835 GMT. U.S. light crude CLc1 was 50 cents higher at $65.57.