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.

Energy trends

  • 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.

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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.

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