Global oil and gas transactions review 2013

Upstream activity drops off sharply

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Although 2013 shares the same transaction themes as 2012, companies have adopted a more cautious approach to M&A.

Larger independents have looked to focus on their existing portfolio, and mid-cap companies with sizeable capital commitments have had to entertain varied strategic options as access to capital remains challenging. NOCs remain a key driver for transaction activity, and whilst shareholders have pressed publically listed IOCs for a more cautious approach, NOCs have a freer mandate to pursue acquisition strategies.

There were a total of 1,009 transactions in the upstream sector down 21% from 2012, with announced transaction value of $237 billion, down 17% from the $286 billion level seen in 2012.

Upstream transaction activity by quarter

EY Upstream transaction activity by quarter chart

Upstream transaction activity by quarter

EY Upstream transaction activity by quarter chart

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Asset transactions continue to dominate the deal mix accounting for more than 86% of deals despite a decline of 17% on 2012 levels. Corporate transactions were down both by volume andvalue, indicative of the challenges in agreeing corporate values in the current market and, more so, the conservative approach taken by many of the would-be buyers as they focus instead on their existing asset base.

Deal volume was down across all reported regions over the period, except in CIS/Russia. North America continued to dominate deal activity, but transaction volume was materially lower than in the prior year across both Canada (down 32%) and the US (down 5%).