Oil & gas mergers yield $402bn in 2012

25 January 2013, Sweetcrude, Houston – A study by financial firm, Ernst & Young, released, Thursday, says oil and gas merger activity reached new highs in 2012, with an average of four transactions per day yielding among the highest global levels of any sector.

The company’s annual review counted deals valued at $402 billion for the year, up 19% from 2011’s tally of $337 billion.

Of the new unions, 92 were valued at more than $1 billion, up from 71 hitting that value in 2011.

The overall count of deals was down slightly, however, dropping to 1616 in 2012 from 1664 in 2011.

“The increase in the number of larger deals was a function of more capital becoming available to the right class of buyer together with increased pressure from asset and company owners to crystallise returns,” Andy Brogan, of E&Y’s oil and gas transaction division, said in a statement.

The upstream sector continued to be the heavyweight in deal-making, with tie-ups valued at $284 million by the firm.

North America’s shale oil and gas star faded somewhat, while Canada deals surged with bids by Chinese companies, including the $15.1 billion bid by CNOOC for Nexen.

Africa also saw its business surge, with deals valued at $11.7 billion, up from $7.7 billion on the books in 2011.

Oilfield services yielded among the highest volumes, with the count of 212 deals representing a 10% gain from the year-ago figure.

“Access to new technologies, particularly around subsurface applications, which supports expansion into hard-to-access growth markets, fueled players’ trade activity,” Brogan added.

E&Y expects continued strength in the area into 2013, but said financing may still be on a challenge for smaller firms.

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