Energy M&A update: Q2 2017
United States refineries are running at record levels as the Energy sector continues to experience strong growth based, in part, on increased Chinese consumption of US oil, as well a recovery in global clean energy investments. This Energy M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the Energy industry.
- China increases consumption of US oil1: China, one of the largest oil importers in the world, brought in nearly 100,000 barrels per day from the US through the first five months of 2017—ten times the average in 2016. Chinese customs data shows that imports in April and May have grown to more than 180,000 barrels per day, leading to predictions for the Chinese bill for US oil to exceed $1 billion this year.
- Solar leads clean energy investment rebound2: A recovery in global clean energy investments drove the total amount of investment to $64.8 billion USD this quarter, the highest since Q2 2016. This increase was bolstered by the financing of two major solar photovoltaic projects in the United Arab Emirates which collectively contributed $1.9 billion. Record investment figures in Egypt and Argentina also helped drive the high investment level.
- US refineries running at record levels3: For the week ending May 26, gross inputs to US petroleum refineries (refinery runs) averaged a record high 17.7 million barrels per day as well as 95 percent refinery utilization rates before dropping slightly in the next week. Weekly US refinery runs have exceeded 17 million barrels per day only 24 times since the data has been documented, and all of those instances have occurred since July 2015. This has been aided by the average increase in capacity of 659,000 barrels per day since mid-August 2015.
- Energy future holdings attracts buyers4: The Texas power company that has been in financial distress for almost 10 years now has two new potential homes. Berkshire Hathaway bid $9 billion USD for the utility operator; however, Paul Singer, the hedge fund manager whose firm is the largest creditor of Energy Future Holdings, has expressed interest in making a bid of his own to take over the company which has been in bankruptcy proceedings for more than three years.
This newsletter is a periodic compilation of certain capital markets information. Information contained in this newsletter should not be construed as a recommendation to sell or a recommendation to buy any security. Any reference to or omission of any reference to any company in this newsletter shall not be construed as a recommendation to sell, buy or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. This newsletter is published solely for the general information of clients and friends of Deloitte Corporate Finance LLC. It does not take into account the particular investment objectives, financial situation, or needs of individual recipients. Certain transactions, including those involving early stage companies, give rise to substantial risk and are not suitable for all investors. This newsletter is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known risks, uncertainties and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this newsletter. We and our affiliates and related entities, partners, principals, directors, and employees, including persons involved in the preparation or issuance of this newsletter, may from time to time have “long” and “short” positions in, and buy or sell, the securities, or derivatives (including options) thereof, of companies mentioned herein. The companies mentioned in this newsletter may be: (i) investment banking clients of Deloitte Corporate Finance LLC; or (ii) clients of Deloitte Financial Advisory Services LLP and its related entities. The decision to include any company for mention or discussion in this newsletter is wholly unrelated to any audit or other services that Deloitte Corporate Finance LLC may provide or to any audit services or any services that any of its affiliates or related entities may provide to such company. No part of this newsletter may be copied or duplicated in any form by any means, or redistributed without the prior written consent of Deloitte Corporate Finance LLC.
1 “US oil producers find a surprise new market: China,” The Wall Street Journal. July 6, 2017.
2 “Solar led clean energy investment rebound in Q2,” Solar Industry Magazine. July 7, 2017.
3 “US refineries are running at record-high levels,” US Energy Information Administration. June 20, 2017.
4 “Berkshire Hathaway makes a $9 billion bid for energy future holdings,” The New York Times. July 7, 2017.