M&A deals decline by more than half in March

Mergers and deals fell between February and March but the Shell takeover of BG Group, which owns the Queensland Curtis LNG project, will have a positive impact next quarter.

Mergers and acquisition deals fell between February and March but the Shell takeover of BG Group, which owns the Queensland Curtis LNG project, will have a positive impact next quarter.

By Courtney Pearson

April 22, 2015

THE value of upstream oil and gas mergers and acquisitions fell significantly between February and March this year, research and consulting firm GlobalData revealed.

In March the value had slumped to $829.8 million, a far cry from the previous month’s $2.9 billion of mergers and acquisitions.

Most of the month’s oil and gas capital — $703.7 million — was spent acquiring Americas-based companies.

GlobalData head of oil and gas research and consulting Matthew Jurecky said deals had been sluggish since June last year, but the first quarter of this year was the slowest in years.

“Merger and acquisition volume was down again with only 10 deals announced in March 2015, compared with 11 in February 2015,” he said.

“While the Shell-BG [Group] merger will have a positive impact next quarter in terms of the total value of deals announced, the number of deals will remain low.”

Royal Dutch Shell recently announced a bid to take over BG Group for $91 billion in one of the industry’s biggest deals.

With interest rates at historic lows and equity markets remaining volatile, the review also noted a massive rise in March debt financing.

Financing through equity and debt offerings, private equity and venture financing totalled $30.6 billion from 78 deals, a massive rise from February’s total of $12 billion. Seventy per cent, or $21.4 billion, of investments came from the debt offerings market, a substantial increase from $7.5 billion in February 2015.

“More capital was raised in any month of last year, and debt markets continue to register high levels of activity,” Mr Jurecky said.

“Increasing levels of debt could eventually prove challenging for some, should low crude oil prices continue much longer.”