Billion Dollar Deals Still Coming Despite Weaker Market

In a week that saw oil prices crash from recent highs on the back of a flurry of poor economic data across the globe, the E&P sector remained bullish with potentially two billion dollar deals announced, according to Evaluate Energy’s analysis of this week’s deals.

One deal that was definitely in excess of a billion dollars was the further divestment of a 10% stake in YPF by Repsol-YPF to the Petersen Group for $1.3 billion. Click here for Evaluate Energy’s full analysis of the deal (clients only). Repsol has been steadily decreasing its interest in its South American focused subsidiary following increased government intervention and taxes especially within Argentina and Bolivia. The value of YPF has remained flat in the previous 4 years and is currently 38% lower than its peak in 2005. Repsol will be hoping that the money raised on the sale will see a better return from its intended target in the deepwater resources of Brazil. Following this deal Repsol’s stake in YPF which once stood at 98% will decrease to 58%, just 7% shy of their target final interest in YPF of 51%.

The other potential billion dollar deal came from Chevron’s acquisition of 228,000 acres in the Marcellus shale play from Chief Oil & Gas. The terms of the transaction were undisclosed but as the cost per acre in the Marcellus shale play can range from $4,000 per acre for an undeveloped asset to over $10,000 per acre for a partially developed property the estimated price could be between $1-$2 billion. Judging by Chevron’s disclosure that the acquisition is likely to add 5 trillion cubic feet of gas reserves it’s likely that the consideration will lie in the middle to high portion of this estimate.

In Canada, Crew Energy sealed a transformational deal, which will almost double the company’s production whilst increasing the liquids weighting of the company’s portfolio of assets. Crew are acquiring Caltex Energy Inc, a company with liquids rich gas assets in the Peace River area and heavy oil operations in the Lloydminster area of Saskatchewan for C$623 million. The normalised cost per proved boe equates to C$19.65 which looks to be at a slight premium to an assumed fair price of C$17 based on the resource type and stage of development.

The Gulf of Mexico-focused, Dynamic Offshore Resources completed its eighth transaction since its inception in 2008 with the $42.5 million acquisition of Gulf of Mexico shelf assets. The price looks attractive at just $5.85 per proved & probable boe. Even factoring in the $16 million of increased asset retirement obligations that the properties will add, the normalised cost per proved and probable boe still equates to barely over $8.

Top Deals of the Week

EvaluateEnergy  tracks every global upstream deal on a daily basis, estimating normalised deal value, in-depth financial and operating detail behind each deal and an explanation and opinion on deal rationale . Normalised deal value reveals underlying reserve values.

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