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Deloitte Oil & Gas Mergers and Acquisitions Report – 2015 Update
Adjusting to the new reality
For the oil and gas industry, the mergers and acquisitions (M&A) deal market recovered somewhat in the second quarter of 2015, both in terms of number of transactions and overall value relative to the first quarter, due in part to the announcement of one large international deal.
While expectations of a short-lived, low-price environment persisted through the end of 2014, acceptance of the lower pricing environment began to grow over the course of 2015, resulting in market participants retrenching, cutting costs, and delaying capital projects to conserve cash.
Deloitte has prepared the "Oil & Gas Mergers and Acquisitions Report – 2015 Update: Adjusting to the new reality" to provide an overview of the dynamics of the deal market for the first half of 2015 and emerging trends for the rest of this year and into early 2016. The report covers deals announced during the first half of 2015 by industry subsector.
Highlights, by subsector, include:
- Over half of exploration and production (E&P) upstream deal value through the second quarter can be attributed to one large transaction.
- Revenues at the largest oilfield services companies were down more than 25 percent from 2014 with greater declines suffered by companies focused on the North American drilling market.
- In the midstream sector, the number of deals consummated or announced in the second quarter was slightly above the first quarter of the year, and trending above the same period in 2014, although most deals were quite low in value.
- In the refining and marketing sector, global deal activity increased in the second quarter, compared to the first quarter of 2015 in terms of number of transactions, but total deal value declined.
In the second half of 2015, M&A activity in the oil and gas industry may regain momentum as more pressure builds from lenders for highly leveraged operators to shore up balance sheets with asset sales. Historically, M&A transactions are strongest in the fourth quarter and current indicators point to increased activity at the end of 2015.