great driver
US oil producers are expected to look to do business in the oil sector this year amid concerns that the best drilling sites are becoming scarcer.
There has been a big uptick in activity in recent weeks as buyers and sellers prepare for deals after limited activity in recent years, according to a report in the Financial Times on Sunday, citing bankers and lawyers.
Pete Bowden, Jefferies’ global head of energy, told the FT there will be a “raft” of M&A this year.
The expected increase in transactions comes after there were just 13 deals last year, the lowest since 2005, according to the FT, citing consultancy Enverus.
Major deals last year included Diamondback Energy’s (FANG) purchase of Rattler Middstream for ~$2.2bn and in November Diamondback agreed to acquire all lease rights and related assets from closed-end FireBird Energy for $5.86m of common shares and $775 million in cash. Marathon Oil (MRO) agreed in November to acquire assets of the Eagle Ford shale in South Texas from Ensign Natural Resources for $3 billion, nearly doubling its position in the basin near the company’s legacy properties. And last month, Vitol’s VTX agreed to acquire Delaware Basin Resources.
Buyer and seller activity is expected to pick up in the second quarter, especially among private equity firms, the FT reported.
The most likely targets are expected to be publicly traded oil and gas producers with market capitalizations of less than $10 billion, according to the report.
Last month, Permian Resources (PR) agreed to buy land in New Mexico for $98 million and sell $70 million worth of property.