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Global oil and gas deals reached $141bn in the first six months of 2014 rising from $102 billion in the first half of 2013, according to Deloitte’s latest report.
A total of 299 merger and acquisition transactions were completed in H1 this year equallying to $40bn increase since the same period last year.
The first half of 2014 saw a continuation of many of the oil and gas industry trends present in 2013 as companies remain focused on cost containment and organic growth, particularly in the upstream sector, where producers are looking to ensure they have the right mix of properties in their portfolio.
“Largely because of geopolitical unrest that has curtailed production from Libya, Iraq, and Iran, commodity prices have remained relatively high for the first half of the year, and expectations for continued upward pressure on prices for the remainder of the year may make producers less likely to part with assets,” explains Kenneth McKellar, partner in charge of the energy and resources industry at Deloitte Middle East.
“Meanwhile, natural gas prices have remained stable, and the potential for increased demand from US exports of liquefied natural gas (LNG) may draw some new buyers to the market as they look to increase their exposure to gas.” The United States and Canada accounted for 61 percent of all deal activity, though this percentage slipped slightly from the first half of 2013. In the first half of the year, both Asia and South America saw increases in their share of the deal count rising nearly 20 percent and 50 percent, respectively.
“The uptick in deal activity in June of this year could signify a stronger deal market in the second half of the year. Upward pressure on commodity prices is likely to drive more transactions, and private equity investors, in particular, are likely to continue to show interest and be a source of capital,” said Humphry Hatton, CEO of Deloitte Corporate Finance Ltd., regulated by the Dubai International Financial Center.
