{"id":7977,"date":"2020-02-13T09:52:35","date_gmt":"2020-02-13T09:52:35","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=7977"},"modified":"2020-02-13T09:52:35","modified_gmt":"2020-02-13T09:52:35","slug":"deloitte-oil-and-gas-ma-outlook-shifting-strategies-reshaping-global-transactions-market-in-2020-and-beyond","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/deloitte-oil-and-gas-ma-outlook-shifting-strategies-reshaping-global-transactions-market-in-2020-and-beyond\/","title":{"rendered":"Deloitte Oil and Gas M&#038;A Outlook: Shifting Strategies Reshaping Global Transactions Market in 2020 and Beyond"},"content":{"rendered":"<p><b>Key takeaways<\/b><\/p>\n<ul>\n<li>While total oil and gas deal count declined in 2019, total deal value held up thanks to several mega-deals, primarily in upstream and downstream.<\/li>\n<li>Majors and large independents are expected to drive deal making as they continue to optimize their portfolios and divest higher carbon projects.<\/li>\n<li>International oil and gas companies will likely continue to expand their downstream footprint to pursue growing demand for petrochemicals.<\/li>\n<li>Continuing challenging market conditions could drive further U.S. shale sector consolidation in 2020.<\/li>\n<\/ul>\n<p><b>Bigger was better in 2019<br class=\"dnr\" \/><\/b>While total deal value in 2019 increased 40% to\u00a0<span class=\"xn-money\">$370 billion<\/span>, thanks to several upstream and downstream mega-deals, overall deal count declined year-over-year (YOY) by 40% as companies continue to struggle with low commodity prices and challenging market conditions, according to Deloitte&#8217;s &#8220;<a href=\"https:\/\/www2.deloitte.com\/us\/en\/pages\/energy-and-resources\/articles\/oil-and-gas-mergers-and-acquisitions.html\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">2020 Oil and Gas M&amp;A Outlook<\/a>.&#8221; The annual report explores the factors that impacted\u00a0<span class=\"xn-money\">2019 M<\/span>&amp;A activity and provides insight on trends to watch for in 2020.<\/p>\n<p><b>A look back at 2019: M&amp;A sector by sector<\/b><\/p>\n<ul>\n<li><b>Upstream<\/b>\u00a0deal values totaled\u00a0<span class=\"xn-money\">$156 billion<\/span>, up\u00a0<span class=\"xn-money\">$26 billion<\/span>\u00a0YOY. Only 208 deals were struck, 40% below the five-year trend. The U.S. was the hub of global upstream M&amp;A last year, representing more than 60% in terms of both deal volume and value.<\/li>\n<li><b>Midstream\u00a0<\/b>significantly increased in both deal count and deal value in 2019, striking 76 deals worth\u00a0<span class=\"xn-money\">$78 billion<\/span>, a 30% and 50% YOY increase, respectively. Private equity spend increased in this sector as investors pivoted from production to infrastructure.<\/li>\n<li><b>Downstream<\/b>\u00a0deal value reached\u00a0<span class=\"xn-money\">$114 billion<\/span>, a decade high and almost double the prior year and five-year average, while the number of transactions declined 15% YOY.<\/li>\n<li><b>Oilfield services<\/b>\u00a0(OFS) deal making stalled with deal values reaching\u00a0<span class=\"xn-money\">$19 billion<\/span>\u00a0in 2019, down\u00a0<span class=\"xn-money\">$2.5 billion<\/span>\u00a0YOY and 35% below the five-year average. Volumes decreased 20% YOY, 10% below the five-year average.<\/li>\n<\/ul>\n<p><b>Key quotes<\/b><\/p>\n<p>&#8220;As we enter 2020, the new decade seems to be ushering in a new era of oil and gas portfolio design driven by changing shareholder and investor expectations. As portfolio optimization, capital discipline and sustainability issues move increasingly to the core of corporate decision making, the drivers and types of deals will likely evolve.<\/p>\n<p class=\"prntar\">&#8211;\u00a0<a href=\"https:\/\/c212.net\/c\/link\/?t=0&amp;l=en&amp;o=2716516-1&amp;h=231139216&amp;u=https%3A%2F%2Fwww2.deloitte.com%2Fus%2Fen%2Fprofiles%2Frdickson.html&amp;a=Duane+Dickson\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span class=\"xn-person\">Duane Dickson<\/span><\/a>,\u00a0<br class=\"dnr\" \/>vice chairman and U.S. oil, gas and chemicals leader, Deloitte Consulting LLP<\/p>\n<p>&#8220;Facing continued headwinds, many private equity firms are being forced to hold their investments for a longer period as an IPO or sale to a corporate buyer is often not a feasible exit strategy, except for the most valuable positions. These challenges are pushing most portfolio companies to focus on operations to generate returns, until an exit can be made.&#8221;<\/p>\n<p class=\"prntar\">&#8211;\u00a0<a href=\"https:\/\/c212.net\/c\/link\/?t=0&amp;l=en&amp;o=2716516-1&amp;h=238074874&amp;u=https%3A%2F%2Fwww2.deloitte.com%2Fus%2Fen%2Fprofiles%2Fmyee.html&amp;a=Melinda+Yee\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span class=\"xn-person\">Melinda Yee<\/span><\/a>,<br class=\"dnr\" \/>partner, Deloitte &amp; Touche LLP<\/p>\n<p><b>M&amp;A outlook for 2020: More of the same, but a little bit different<br class=\"dnr\" \/><\/b>According to the report, absent an increase in commodity prices, the dampened level of deal making activity is expected to continue in 2020. However, as many companies change their portfolios to match external market conditions and their own shifts in strategic priorities, evolving trends and themes could shape the oil and gas transactions market in the year ahead and beyond.<\/p>\n<p><b>Past M&amp;A to spur future M&amp;A activity<br class=\"dnr\" \/><\/b>The largest driver in 2020 divestitures will likely be massive 2018 and 2019 acquisitions. Upstream companies involved in recent deals are expected to continue to realign their portfolios and strategies while also looking for divestment opportunities that allow them to focus on expanded footprints and assets.<\/p>\n<p><b>Pursuing greener pastures means divesting higher carbon assets<br class=\"dnr\" \/><\/b>In looking at existing assets, some companies are considering carbon footprints when it comes to divestitures. As investor sentiment has changed, oil companies have increased their discussion of environmental, social and governance (ESG) issues. As the size of ESG investment funds grow, so could oil and gas companies&#8217; interests in burnishing their environmental credentials. To that end we will likely see not only increased renewables investment but also carbon-based divestures.<\/p>\n<p><b>Majors expected to be primary catalyst for global M&amp;A<br class=\"dnr\" \/><\/b>In 2019, the majors divested a wide swath of assets across a range of geographies and resource types. The pace may slow down this year, but opportunities remain for further portfolio streamlining with some potentially large asset divestitures across U.S. shale plays, the North Sea and\u00a0<span class=\"xn-location\">Asia-Pacific<\/span>\u00a0in play.<\/p>\n<p><b>Integrated and national oil companies moving onward and downward<br class=\"dnr\" \/><\/b>To capitalize on growing chemicals demand, most international oil and gas companies are continuing to expand their downstream footprints, beyond refining assets, and into distribution, retail, and chemicals businesses.\u00a0This investment push, that has primarily targeted integrated refining and petrochemical assets, as well as fuel and natural gas networks in the\u00a0<span class=\"xn-location\">Middle East<\/span>\u00a0and\u00a0<span class=\"xn-location\">Asia Pacific<\/span>, is expected to continue.<\/p>\n<p><b>Capital markets freeze could prompt upstream and OFS consolidation<br class=\"dnr\" \/><\/b>In 2020, we could see more consolidation of upstream and OFS companies as capital markets refuse to thaw, and topline U.S. production growth continues to decline. Sellers and management teams, however, might need to be willing to forgo significant premiums to get the deals done in order to achieve the synergies and economies of scale that form the strategic basis for executing the deal \u2014 which may make stock more palatable as currency.<\/p>\n<p><b>Private equity strategy shift may bring shale sector consolidation<br class=\"dnr\" \/><\/b>A pivot in private equity&#8217;s traditional strategy may accelerate consolidation in shale. With the oil and gas IPO market dead in the water and debt issuance trending monotonically downward since 2014, private equity firms and their portfolio companies are rethinking their traditional build-and-flip strategy. The year 2020 may see the build-to-operate model fully take flight in the Permian and beyond.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key takeaways While total oil and gas deal count declined in 2019, total deal value held up thanks to several mega-deals, primarily in upstream and downstream. Majors and large independents &hellip; <a href=\"https:\/\/www.oilnewskenya.com\/index.php\/deloitte-oil-and-gas-ma-outlook-shifting-strategies-reshaping-global-transactions-market-in-2020-and-beyond\/\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":7978,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[11],"tags":[579,5337,955,5794,5336,1827,1899,2650],"class_list":["post-7977","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-top-news","tag-deloitte","tag-downstream","tag-gas","tag-ma","tag-midstream","tag-oil","tag-oilfield-services","tag-upstream","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/Deloitte.jpg?fit=649%2C370&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-24F","jetpack-related-posts":[{"id":7983,"url":"https:\/\/www.oilnewskenya.com\/index.php\/oil-and-gas-ma-deal-value-decreased-in-2019-driven-by-energy-transition-considerations-and-global-uncertainty-ey\/","url_meta":{"origin":7977,"position":0},"title":"Oil and gas M&#038;A deal value decreased in 2019 driven by energy transition considerations and global uncertainty &#8211; EY","author":"","date":"February 14, 2020","format":false,"excerpt":"Global oil and gas overall deal volume and deal value were down 17.7% and 10.8% respectively in 2019, as stagnant commodity prices, disappointing results, and low returns left the industry searching for capital. This is according to the\u00a0EY Global oil and gas transactions review 2019, which reveals that the transaction\u2026","rel":"","context":"In &quot;Top News&quot;","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/EY-Oil-Check.jpg?fit=927%2C617&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/EY-Oil-Check.jpg?fit=927%2C617&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/EY-Oil-Check.jpg?fit=927%2C617&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/EY-Oil-Check.jpg?fit=927%2C617&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":11892,"url":"https:\/\/www.oilnewskenya.com\/index.php\/angolas-oil-and-gas-sector-is-ripe-for-new-investments\/","url_meta":{"origin":7977,"position":1},"title":"Angola\u00b4s Oil and Gas Sector is Ripe for New Investments","author":"","date":"February 22, 2022","format":false,"excerpt":"By Verner Ayukegba, Senior Vice-President of the African Energy Chamber Angola is sub-Saharan Africa\u00b4s second-largest oil and gas producer with a current production capacity of about 1.1 million barrels of oil per day (bpd) and 17,904.5 million cubic feet of natural gas. 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Underwriting Africa whose headquarters are based in Nairobi has among its Reinsurance Partners Swiss Re with other brokerage partners in London and Paris.\u2026","rel":"","context":"In &quot;Top News&quot;","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2015\/09\/underwriting-africa.png?fit=243%2C245&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/comments?post=7977"}],"version-history":[{"count":1,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7977\/revisions"}],"predecessor-version":[{"id":7979,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7977\/revisions\/7979"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media\/7978"}],"wp:attachment":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media?parent=7977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/categories?post=7977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/tags?post=7977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}