Large producers, NOCs may buy more North American shale in 2013: Deloitte
Washington (Platts)--11Feb2013/416 pm EST/2116 GMT
This year may be when that deep-pocketed major and national oil
companies snatch up North American shale gas acreage, taking advantage of the
discount between North America's cheap gas prices and steeper prices
worldwide, accounting firm Deloitte said Monday.
"We continued to see strong interest from foreign buyers, including
state-owned enterprises," Deloitte partner Jim Dillavou said.
"Those companies are getting involved in North America's oil and gas
markets in order to better understand shale and tight oil resources."
Deloitte principal Treavor Thomas said. "NOCs want to be a part of the
North American energy business. It is where a lot of the technology is based,
and where many skilled workers reside. NOCs want to leverage that technology
and skill in other parts of the world."
Article continues below...
Sign up for Gas Daily
Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate pipeline and pooling points in major U.S. markets. Gas Daily keeps you informed about complex state and federal regulations that affect competition in the gas industry.
Globally, Deloitte counted $321.5 billion worth of merger and
acquisition deals in 2012, including the $61.6 billion purchase of TNK-BP by
Russia's Rosneft. Deloitte counts deals worth $10 million and discounts deals
between affiliated companies.
Competing firms PwC and Ernst & Young differed over how hot or cold the
M&A market is for US oil and gas producers. PwC last week said the fourth
quarter was the hottest in 10 years. PwC's survey only covers deals worth
more than $50 million. Ernst & Young, which excludes fewer deals from its
screen, found the US market had 19% fewer M&A deals in 2012.
Deloitte found 404 deals worth $187 billion in North America in 2012,
more than half the global value. Deloitte tracks deals in the upstream,
downstream, and mid stream sectors, as well as services and refining and
In 2011 there were 494 deals done in North America for a total $207.3
billion, Deloitte said.
"The large integrated companies need to increase production, and one way
to do that is through prudent acquisitions," Deloitte principal Roger Ihne
"North American natural gas assets may look particularly attractive to
buyers with long-term time horizons, given depressed prices that may be
putting pressure on smaller companies to sell," Deloitte's report said.
"At some point the valuations in the natural gas area become so
attractive that buyers with a long-term strategy can make a good deal of
money," Ihne said.
The firm does not expect natural gas prices to move significantly higher
"Once again, producers fell victim to their own effectiveness as natural
gas liquids prices reacted to the resulting increased supply by weakening in
2012, creating further pressure on gas producers," Deloitte noted.
In the midstream sector, Deloitte predicted the emergence of master
limited partnerships as companies move to shore up
their positions in and around major shale plays.
Midstream M&A activity was quiet in 2012, Deloitte said, with $35.6
billion in deals, less than half that of 2011's $84.5 billion, although that
year's number was skewed by Kinder Morgan's $21.2 billion purchase of El
Paso's pipeline group.
"Deloitte believes that, over the next few years, the size of capital
expenditures in the midstream area could easily exceed the current market cap
of those companies," Deloitte's US Oil and Gas Leader John England said. "It
is therefore reasonable to think that we could see some bigger players enter
the market, some consolidation take place, or a combination of both, if the
midstream segment is going to continue to support the shale and tight oil
activity that is taking place in the US."
"We are witnessing the emergence of 'supermajors' in the MLP sector,
with big players getting bigger," Deloitte principal Jed Shreve said.
"Looking ahead, we expect continued growth in this area, and related
acquisition activity, as MLPs search for quality assets to grow their
--Bill Holland, email@example.com
--Edited by Jeff Barber, firstname.lastname@example.org