Global Upstream M&A Transaction Value Plunged to Lowest Level since 2008, IHS Says

Chinese national oil companies dominated largest deals in 2013 while many companies focused on exploration and development spending

Thursday, January 2, 2014 6:00 am EST


"However, the total global upstream capital investment increased by approximately 10 percent in 2013 due to the significant growth in exploration and development spending."

After years of deal-making and robust merger and acquisition (M&A) activity globally, oil and gas companies shifted their focus in 2013 to developing their vast inventories of previously acquired reserves, resources and acreage, says information and insight provider IHS (NYSE: IHS). As a result, transaction value for global oil and gas M&A deals fell by almost half during 2013 to $136 billion, the lowest level since the 2008 recession.


According to IHS energy M&A research, worldwide deal count declined by 20 percent from the 10-year high in 2012, and after a very sluggish first half of 2013, deal activity accelerated during the second half of 2013.


Led by the Chinese national oil companies (NOCs), Asian and Caspian regional NOCs were the buyers in half of the 10 largest deals globally in 2013. “Following record high deal value of more than $250 billion in 2012, and more than $600 billion of acquisitions during 2010 to 2012, many companies pivoted their focus to the development of recently acquired reserves, resources and acreage,” said Christopher Sheehan, director of energy M&A research at IHS. “However, the total global upstream capital investment increased by approximately 10 percent in 2013 due to the significant growth in exploration and development spending.”


The number of worldwide asset transactions fell by almost 15 percent, noted IHS, while the corporate deal count dropped by 50 percent. After several large corporate takeovers that exceeded $10 billion in 2012, no corporate mergers exceeded $5 billion in 2013. According to IHS research, offshore and conventional onshore resources gained global M&A market share in 2013 with offshore transactions accounting for four of the 10 largest deals. However, spending on unconventional deals, said IHS, plunged by more than half in 2013, to approximately $40 billion.


Said Sheehan, “Following record setting purchases of more than $200 billion on unconventional resources during the prior three years, varied drilling results in emerging North American basins made buyers more cautious in 2013. In particular, overseas firms reduced their cross-border purchases, and oil and gas companies concentrated on exploiting the best performing areas of their vast development inventories.”


Unconventional resources, Sheehan added, were the primary target in only one of the top 20 largest global transactions, although Devon’s $6 billion purchase of Eagle Ford assets from privately held GeoSouthern Energy, was the largest global transaction in 2013. Total U.S. transaction value declined to a five-year low in 2013, with corporate deal value falling to a 10-year low.


Thanks to persistent, low natural gas prices, the natural gas percentage of acquired U.S. reserves for the year hit a 10-year low. U.S. deal activity was predominantly in the Mid-Continent, onshore Gulf Coast, and Rocky Mountain regions. Unconventional resources represented half of the 10 largest deals in the U.S.


IHS found that North American acquisitions represented only three of the 20 largest deals during 2013. The North American market share of worldwide transaction value fell to less than 45 percent from approximately 50 percent in 2012, as buyers sought access to prolific international discoveries. Transactions in West and East Africa more than doubled the market share of the Africa and Middle East region to 15 percent, and spending in Latin America also increased notably to 7 percent.


The Russia and Caspian region represented more than 25 percent of global total transaction value for the second consecutive year, as Rosneft continued to expand its domestic holdings. The combined value of transactions in Canada, Europe, and Asia totaled just above 15 percent of the global total, down from nearly 30 percent in 2012.


The oil and liquids percentage of acquired proved (1P) reserves in North America and proved plus probable (2P) reserves outside North America, excluding the Russia and Caspian region, both remained near a 10-year high. Total transacted 1P and 2P reserve volumes fell steeply, said IHS, as there were no transactions in 2013 that approached Rosneft’s $60 billion purchase of Russian producer TNK-BP in 2012.


For more information on IHS M&A Research or the IHS Herold M&A database, please contact To speak with Christopher Sheehan, please contact or


About IHS (

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs approximately 8,000 people in 31 countries around the world.


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