Since the beginning of this year, affected by the slow growth of global investment in oil and gas exploration and development, the continued increase in geopolitical risks in some important oil-producing countries, voluntary production cuts by some OPEC+ members and pessimistic market expectations for the recovery of the world economy, the spot average prices of Brent crude and West Texas Intermediate (WTI) in the first half of the year are $79.78 / barrel and $74.91 / barrel, respectively. It has a great impact on the global oil and gas resources M & A market. On the one hand, with the significant decline of international oil prices from the high in 2022, the global oil and gas resources M & A market tends to be active in the first half of 2023. Although the number of M & A transactions is slightly lower than that of the same period in 2022, the value of M & A transactions has increased significantly compared with the first half of 2022, even much higher than the average for the same period of nearly a decade. On the other hand, relatively stable international oil prices have also reduced the valuation of traded assets, and the valuation premium is more reasonable in completed mergers and acquisitions than in the same period in 2022.

"quantity drop and price rise" in M & A market

From the point of view of the number of M & A transactions and the amount of M & A transactions, the global oil and gas resources M & A market shows a new trend of "volume decline and price rise" in the first half of 2023. In terms of the number of deals, the activity of mergers and acquisitions of global oil and gas resources dropped sharply in the first half of the year, with 102 deals reached, down 8 per cent from the same period in 2022, and the lowest number of mergers and acquisitions in the first half of the decade except for the first half of 2020. In terms of transaction value, the global oil and gas M & A market reached US $63 billion in the first half of the year, up 70 per cent from US $37 billion in the same period in 2022 and higher than the average for the same period in the past five years and 10 years respectively.

From the perspective of transaction size, according to the latest statistics of Wood Mackenzie, an energy consulting firm, there were more than a dozen large-scale mergers and acquisitions of oil and gas assets with a transaction value of more than $1 billion in the global upstream resource market in the first half of 2023. Among them, there are two "super mergers and acquisitions" with a transaction value of more than $5 billion. A consortium of Canadian Brookfield Investment Management and American private equity fund EIG acquired Australia's Origin Energy Company for $13.1 billion, which is the largest oil and gas asset M & A deal reached in the world in the first half of the year. Chevron's acquisition of PDC Energy for more than $7.6 billion was the second largest upstream oil and gas deal in the first half of the year.

In addition, Ovintiv, an independent US oil and gas producer, bought Permian basin shale oil and gas assets held by private equity EnCap Investment for $4.3 billion, ConocoPhillips acquired Total Energy's Canadian oil sands assets for $3.1 billion, and BP and Abu Dhabi National Oil Company formed a consortium to acquire Israel's New Mediterranean Energy Company for $2.8 billion. And Italy's Eni's $2.6 billion acquisition of Neptune Energy, held by private equity funds, are also large-scale upstream oil and gas assets mergers and acquisitions in the first half of the year.

From the perspective of transaction oil prices, according to Wood Mackenzie's calculations, the average oil price evaluated by global oil and gas mergers and acquisitions in the first half of 2023 is 58 US dollars per barrel, which is basically consistent with the annual average level of 2022, but significantly lower than the average level of Brent and WTI international benchmark oil prices in the first half of 2023. The agency said that under the influence of factors such as the expected decline in global economic growth and the global energy transformation, some international oil companies still maintain a cautious attitude of investing in upstream assets at this stage, insisting on focusing on the real value of oil and gas assets, objectively limiting the sharp rise in oil prices evaluated by mergers and acquisitions.

In terms of natural gas, in the first half of 2023, the evaluation prices of mergers and acquisitions of natural gas assets increased significantly compared with the same period in 2020, 2021 and 2022, indicating that all kinds of international oil companies attach importance to natural gas assets at the present stage.

North America is still the focus of attention.

From the perspective of trading area, North America is still the focus of the global oil and gas resources M & A market in the first half of 2023. There were more than 50 mergers and acquisitions in the region, significantly lower than in the same period in 2022. Of these, there were six deals worth more than $2 billion, all related to unconventional oil and gas assets; the total value of mergers and acquisitions was $37.7 billion, up 54.5 per cent from $24.4 billion in the same period in 2022. In addition to Chevron's acquisition of PDC Energy, Ovintiv's acquisition of some assets of EnCap Investment, and ConocoPhillips's acquisition of Total Energy's oil sands assets, Canada's Baytex Energy Company acquired the Eagle Beach Shale assets of US oil and gas producer Ranger for US $2.5 billion, and US shale oil producer Civitas acquired Permian basin shale oil and gas assets for US $4.7 billion. It is also a large amount of M & An activity in North America in the first half of 2023.

The oil and gas resources M & A market in Europe was relatively stable in the first half of the year, and the number and amount of M & A transactions completed were basically the same as those in the same period in 2022. The acquisition of Neptune's Norwegian oil and gas assets by Norwegian Var Energy for $2.3 billion is the largest merger and acquisition deal completed in the region in the first half of 2023.

Affected by major deals such as the $13.1 billion acquisition of Australia's Origin Energy Company by Brookfield Investment Management and US private equity fund EIG, as well as Eni's acquisition of some assets of Neptune Energy, the Asia-Pacific region has become a new bright spot in the oil and gas resources M & A market in the first half of 2023, with a total transaction value of US $16.9 billion, a record high in the region.

The M & A market of oil and gas resources in the Middle East was also active in the first half of 2023, with four transactions and a total value of nearly $3 billion, the highest in nearly five years, among which Israeli natural gas assets became the focus of mergers and acquisitions in the region. The M & A market in Africa and Latin America was lacklustre in the first half of 2023, with the number and value of deals lower than those of the same period in 2022.

In terms of resource types, the total value of mergers and acquisitions related to unconventional oil and gas assets in North America exceeded $30 billion in the first half of 2023, nearly 50 per cent of the total value of global upstream oil and gas mergers and acquisitions. Of this total, North American shale oil-related mergers and acquisitions were worth about $27 billion, up nearly 50 per cent from the same period in 2022 and close to the highest level in five years in the first half of 2020. Permian basins, Denver-Juersburg basins and Yingtan shale are key areas for shale oil-related mergers and acquisitions in North America in the first half of 2023. The Canadian oil sands market is back in the spotlight. ConocoPhillips bought some of Total Energy's oil sands assets for $3.1 billion, which is also a high-value unconventional oil and gas asset M & A deal in recent years. North American shale gas was affected by factors such as the decline in gas prices at Henry Center in the United States in the first half of 2023, and the related M & A transactions were relatively low, and the amount of transactions completed were lower than those of the same period in 2021 and 2022. Source: Sinochem New Network