Record $86 Billion in 2011 U.S. Oil and Gas Upstream Deals, Up 15% from prior 2010 record

HOUSTON, Jan. 13, 2012 /PRNewswire/ -- PLS, Inc. reports that United States M&A activity for upstream oil and gas deals set records in 2011 for both deal values and deal counts.  Totals for 2011 are $86 billion (versus prior 2010 record of $75 billion) in 369 deals (versus prior 2010 record of 313 deals).  According to Ronyld W. Wise, President of Houston-based PLS, Inc., "Industry appetite for oil-rich resource plays, particularly the North Dakota Bakken shale, Texas Eagle Ford shale and Ohio Utica shale, drove deal activity in the unconventional sector to a record $62 billion. We expect continued strong activity in oil and liquids-rich resource plays in 2012."  Already in 2012, Devon Energy has struck a $2.5 billion JV with China-based Sinopec across five new venture resource plays.  Other large deals in the market include: 1) the E&P portfolio of El Paso Corporation, 2) EnerVest partnerships seeking another Utica shale JV partner or outright sale via a process anticipated in mid-2012 and, 3) Chesapeake working three JV deals (Williston basin, Mississippian and a third undisclosed area). 

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The data for this report is from PLS' industry leading M&A Transactions Database maintained in conjunction with its partner, Derrick Petroleum Services.  A comprehensive review of Oil and Gas M&A Activity in 2011 will be completed in the next several weeks.

Table 1
U.S. Upstream Oil and Gas Deal Counts and Values
		2006			2007			2008			2009			2010			2011
Category		#	$B		#	$B		#	$B		#	$B		#	$B		#	$B
Conventional		131	$53		183	$46		178	$25		133	$14		181	$33		214	$24
Unconventional		23	$4		29	$4		58	$21		43	$48		132	$42		155	$62
TOTAL		154	$57		212	$50		236	$46		176	$62		313	$75		369	$86
Source: PLS, Inc.

For the unconventional sector, six of the deals in 2011 make the Top 10 list for unconventional deals by value (see Table 2) since 2006.  Australian-based BHP Billiton made two Top 10 acquisitions in 2011.  In July, BHP acquired Petrohawk Energy for $15.1 billion with producing assets primarily in the Eagle Ford and Haynesville shales.  Earlier in the year, in February, BHP acquired all of Chesapeake Energy's interests in the Fayetteville shale play in central Arkansas for $4.8 billion.

In the largest corporate M&A deal of the year across all industries in the United States in 2011, Kinder Morgan acquired El Paso Corporation for $37.8 billion in October, creating North America's largest midstream company.  In its analysis, PLS allocated $7.2 billion for the upstream E&P portfolio of El Paso which ranks the upstream oil and gas portion of the deal as the third largest unconventional, upstream transaction since 2006. 

Looking further into the unconventional sector by plays, the Bakken shale led deal activity striking 49 separate transactions (32% of all unconventional activity) totaling $7.2 billion, up from 17 deals (13%) for $4.6 billion in 2010.  The Eagle Ford shale was the second leading area with 22 deals for $6.7 billion (vs. 30 deals for $9.5 billion in 2010).  The emerging Utica shale accounted for 12 deals and $5.3 billion in 2011.

Table 2
Top 10 Unconventional Deals : 2006 to 2011
Year	Buyers	Sellers	Value ($MM)	Type	Play
2009	ExxonMobil	XTO	$41,000	Corporate	Multiple
2011	BHP Billiton	Petrohawk Energy	$15,100	Corporate	Multiple
2011	Kinder Morgan	El Paso	$7,200	Corporate	Mulitple
2011	BHP Billiton	Chesapeake	$4,750	Property	Fayetteville Shale
2011	Statoil	Brigham	$4,700	Corporate	Bakken Shale
2010	Shell	East Resources	$4,700	Corporate	Marcellus Shale
2010	Chevron	Atlas Energy	$4,300	Corporate	Marcellus Shale
2011	Marathon	Hilcorp Energy; KKR	$3,500	Property	Eagle Ford Shale
2010	Consol	Dominion	$3,475	Property	Marcellus Shale
2011	Noble Energy	Consol	$3,419	JV	Marcellus Shale
Source: PLS, Inc.

For the conventional sector, only one deal made the Top 10 list (see Table 3).  In November 2011, private equity firm Kohlberg Kravis & Roberts led an investor group to acquire prized, privately-held Samson Investments for $7.2 billion. 

For conventional deal activity by region in the United States, the KKR/Samson deal is classified as multiple-region.  Beyond multiple-region, the Permian basin generated the largest deal values in 2011 totaling $5.4 billion in 39 transactions while the Mid-Continent region tallied $3.7 billion in 52 transactions.  Interestingly, California saw increased activity in 2011 with nine deals for $1.5 billion compared to less than $300 million annually from 2006 through 2010.  Also, the shallow portion of the Gulf of Mexico witnessed 22 transactions (for $1.2 billion), up from eight deals in both 2010 and 2009.

Table 3
Top 10 Conventional Deals : 2006 to 2011
Year	Buyers	Sellers	Value ($MM)	Type	Area
2006	Anadarko	Kerr-McGee	$20,139	Corporate	Multiple
2011	KKR; ITOCHU; NGP; Crestview	Samson	$7,200	Corporate	Multiple
2006	Anadarko	Western Gas Resources	$5,321	Corporate	Rockies
2007	ENI	Dominion	$4,757	Property	GOM Deep
2009	Denbury Resources	Encore Acquisition Co.	$4,500	Corporate	Multiple
2008	XTO	Hunt Petroleum	$4,186	Corporate	Multiple
2007	HighMount E&P	Dominion	$4,025	Property	Permian
2010	Apache	Mariner Energy	$3,930	Corporate	Multiple
2007	Plains E&P	Pogo Producing	$3,508	Corporate	Mulitple
2010	Apache	BP	$3,100	Property	Permian
Source: PLS, Inc.

Looking forward, PLS and Derrick expect the market for oil and gas assets to continue at a healthy pace driven in part by onshore North America's remarkable shale transformation from exploration, to appraisal to today's development or "manufacturing process".  The full development of these shale resources requires significant funding from new sources and overseas capital is filling this role. 

Additionally, PLS and Derrick expect the trend of independents such as Samson, Petrohawk and Brigham selling to larger companies to continue especially in light of current North American gas prices and world oil prices.

PLS, Inc. and Derrick Petroleum Services are partners in providing U.S., Canadian and International clients with an industry leading Global and U.S. M&A database and related services.  These databases are maintained 24/7 by a team of analysts and are accessible via the web.

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