Updated outlook confirms accuracy of Drillinginfo’s M&A prediction
Drillinginfo, the leading energy SaaS and data analytics company, reports that U.S. oil & gas M&A activity in Q3 2018 surged 250% over Q2 and broke all quarterly records dating back to Q4 2012. The final tally for Q3 is $32B, up from $9.1B in Q2.
As Drillinginfo correctly predicted at the beginning of July 2018, factors that led to the dramatic increase include:
In a soon-to-be-released report, Drillinginfo findings show $32 B in activity during 3Q 2018 which is 76% above the quarterly average of $18.3B dating back to 2009. The highlight of the quarter was BP’s $10.5B strike to buy a portion of BHP’s U.S. onshore portfolio (Permian, Eagle Ford and Haynesville) which is the single largest asset level purchase on record and also marks BP’s return to offense with its largest upstream buy since buying ARCO for $28B in April 1999. BP reportedly beat out Shell for this asset package – a dynamic that solidifies the importance of the U.S. shales as a key portfolio element for global majors. Also during Q3, Permian-focused Diamondback Energy boldly acquired fellow-Permian producer Energen Resources for $9.2B – a number just shy of the Permian record $9.5B paid by Concho Resources for RSP Permian during Q1 2018.
“We expect U.S. M&A activity to continue at a heightened level,” said Drillinginfo Senior Director Brian Lidsky. “The industry is regularly reporting record well results across the U.S. shales as it continues to de-risk acreage positions and advance technology,” he said.
“As Wall Street is increasingly discriminating among public companies, the food chain of the big getting bigger is alive and well – shale basin leaders are being rewarded for mastering scale, efficiency and technology. This sets the stage for additional mergers that not only checks all the accretive boxes for the buyer, but also provides sellers upside by joining forces with these leaders,” said Lidsky.
“We view the recent Concho and Diamondback examples in the Permian as the start of a trend – not one-off style hits. Shale basin consolidation will be a continuing theme supplemented by occasional major new entrants for those few large and global companies who have not yet established a significant shale presence. Private equity and private companies will continue to play a role in deploying carefully calculated risk dollars to fringe areas and benches within established resource plays plus advancing today’s technology to new areas like the Powder River Basin as well providing inventory as they move to divest mode,” said Lidsky.
Value ($B) by Top Plays
Note: Included in Multiple/Other Play for Q3 is BP’s $10.5B buy from BHP which Drillinginfo allocates as follows: Permian $3.9B, Eagle Ford $4.8 B, Haynesville $1.8B.
Top Takeaways from Q3 2018 U.S. M&A:
Themes and Drivers Looking Forward:
Drillinginfo delivers business-critical insights to the energy, power, and commodities markets. Our state-of-the-art SaaS platform offers sophisticated technology, powerful analytics, and industry-leading data. Our solutions deliver value across upstream, midstream and downstream markets, empowering exploration and production (E&P), oilfield services, midstream, utilities, trading and risk, and capital markets companies to be more collaborative, efficient, and competitive. Drillinginfo delivers actionable intelligence over mobile, web, and desktop to analyze and reduce risk, conduct competitive benchmarking, and uncover market insights. Drillinginfo serves over 3,500 companies globally from its Austin, Texas, headquarters and has approximately 900 employees. In June 2018, Drillinginfo acquired PLS Research and Database business and 1Derrick, leaders in deal analysis and evaluation for investors in oil & gas. For more information, visit drillinginfo.com.