HOUSTON – Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to PwC US. The record breaking year was primarily driven by deals valued at more than $1 billion each. Overall, there were 49 of these “mega” deals worth a total of $266.1 billion in 2014, compared to 24 deals worth $71 billion in 2013.
“While 2014 was a very strong year for oil and gas deal activity, we saw a steady decline in November and December as the drop in oil prices accelerated, contributing to a marked shift in deal sentiment from playing offense to playing defense as companies focused on maintaining liquidity,” said Doug Meier, PwC’s US energy sector deals leader.
“That downward trajectory in oil prices, coupled with the impact of leverage, drove a number of deals related to corporate restructurings and portfolio right sizing activities. In today’s low price environment, the effects of debt could drive additional deal activity as leveraged companies look to strengthen their balance sheets by focusing on cash flow optimization and operational efficiencies. PwC’s Fit for $50 program assists senior management to develop programs that can enable them to withstand the current price environment and help create a platform for profitable growth as commodity prices recover.”
For all of 2014, there were 193 asset deals worth $94 billion, said PwC.
Foreign investors continued to show interest in the US as both deal value and volume were at 10-year highs, contributing 56 deals worth $71.2 billion in 2014.
PwC’s Oil & Gas M&A analysis is a quarterly report of announced US transactions with value greater than $50 million analyzed by PwC using transaction data from IHS Herold.