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Oil, gas industry deals hit 10-year record in 2012
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Major deals in the oil and gas sector hit a 10-year high in 2012, with 204 big-ticket mergers and acquisitions completed last year. Local deals accounted for at least 4 percent of the national total value.
Last year's deals, which were worth a total of $146.2 billion nationally, included $5.23 billion worth in the Marcellus Shale formation and $1.27 billion in the Utica Shale formation, according to a study set for release today by the analysis arm of New York-based PricewaterhouseCoopers, or PwC.
Marcellus and Utica deals showed an emphasis on midstream assets, which build an infrastructure to process and transport gas extracted from the Appalachian formations that lie under parts of Pennsylvania, West Virginia and Ohio. The analysis looked at mergers and acquisitions worth at least $50 million.
The record-setting year was helped by a fourth quarter that was also the busiest in a decade.
Typically, the end of the year sees a boost in activity as companies rush to spend their budgets. But the looming uncertainty of the fiscal cliff deadline and its tax implications also accelerated deal-making, said Steve Haffner, a PwC energy analyst based in Pittsburgh.
PG graphic: Oil and gas deals
(Click image for larger version)
Two deals worth a total of $685 million occurred in the Marcellus Shale in the fourth quarter, and one worth $372 million pertained to Utica Shale development.
That's behind the fourth-quarter pace seen in the Bakken Shale of North Dakota, which had seven deals during the fourth quarter, and the Eagle Ford of Texas, which had six.
Mr. Haffner said the smaller number in the Appalachian formations is not indicative of a lack of interest, since holdings in this region are often bundled with larger assets as part of a multi-faceted acquisition. The PwC analysis categorizes deals according to which formation is getting the largest investment, so a deal that includes Marcellus acreage or assets as an ancillary component wouldn't be considered a Marcellus deal.
Taking that into account "paints a different picture," said Mr. Haffner. "When I look at the raw data, I see Marcellus and Utica at higher levels," he said.
Still, major investors continue to target formations known for higher-priced liquids and oils, especially recently when prices for the kind of gas found in parts of the Marcellus reached record lows.
The price of that gas has seen a slight uptick in recent weeks, especially thanks to cold weather that's forced many Americans to turn up the thermostat, said Mr. Haffner.
"The oil and gas producers are happy," he said. "It breathes some life into gas prices."
First Published January 29, 2013 12:00 am
