Analysis

Energy M&A update: Q1 2017

The Energy sector has seen a great deal of movement due to changes in the political environment. 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.

Energy trends

  • Policy to drive domestic energy production1: President Trump’s administration has laid out plans to cut Department of Energy (“DOE”) and Environmental Protection Agency (“EPA”) funding by 6 percent and 31 percent, respectively. These budget cuts in combination with increased funding for energy development on federal lands will bolster domestic energy and power companies.
  • Photovoltaic installations on the rise2: With solar project costs on the decline, photovoltaic energy production is on the rise. GreentechMedia, a business unit of Wood Mackenzie, projects that 13 GW of new photovoltaic installations will come online in 2017. Annual photovoltaic capacity is expected to nearly triple over the next five years with more than 18 GW of solar photovoltaic capacity installed annually by 2022.
  • Combined-cycle investments jump3: Nearly $75 billion of investments are slated for natural gas-fired, combined-cycle plants in the US over the next four years, exemplifying a continued shift toward the use of natural gas for power generation. These investments, nearly triple the investment in combined-cycle technology over the last four years, are expected to deliver roughly 71 GW of incremental power generation capacity.
  • Stalled pipeline projects resume4: The widely contested Dakota Access Pipeline project has seen steps to continue progress after virtually stalling during the Obama administration. Movement on this project will serve as a boon to oil producers in the Bakken as the pipeline with offer significantly improved infrastructure for getting their product to market. With increased access, Bakken crude prices are expected to normalize.

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References

1 “Trump lays out steep cuts to DOE, EPA budget; energy appropriators react,” SNL Financial. March 2017.
“US Solar Market Insight: 2016 Year in Review,” GreentechMedia Research .March 2017.
3 “US gas combined-cycle investments could approach $75B in next 4 years,” SNL Financial. February 2017.
4 “Renewed Support For Pipeline Projects,” Oil & Gas Financial Journal. April 2017.

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