Merrill DataSite Releases New Comments: Shale Deals Driving M&A in US Energy Sector

Share Article --Shale-related deals have had a major effect on mergers and acquisitions in the US energy market in 2012, with figures for the fourth quarter of the year showing that deals involving shale companies reached a two-year high during the period.

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Shale deals driving M&A in US energy sector

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Shale-related deals have had a major effect on mergers and acquisitions in the US energy market in 2012, with figures for the fourth quarter of the year showing that deals involving shale companies reached a two-year high during the period.

The quarterly Oil & Gas M&A analysis from PricewaterhouseCoopers (PwC) showed that the total deal volume in the US oil and gas sector hit a ten-year high in the last quarter of the year, at 75, with the $56.2 billion value of the deals marking the second highest quarterly value figure for a decade.

Rick Roberge, a principal in PwC's energy M&A practice, said that the vast majority of the robust M&A activity in the energy sector in 2012 took place in the last three months of the year, because many deals were pulled forward due to the economic uncertainty surrounding the fiscal cliff situation.

“This past year was a watershed moment for the industry, with private equity involvement reaching an all-time high, shale deal volume at a two-year high during the fourth quarter, and a jump in asset transactions as companies have shifted their focus to adding more profitable liquid rich shale plays to their portfolios,” Roberge explained.

“We expect to see a slight pause in M&A during the first part of 2013 as companies focus on the recent wave of deals announced, but believe 2013 will be another banner year for deals as the US oil and gas industry is ripe for continued consolidation. In fact, our recent PwC Global CEO Survey found that energy CEOs are among the most confident on growth prospects for this year than any other industry.”

Of the 75 deals carried out in the fourth quarter, there were 27 deals with values greater than $50 million related to shale plays, with a combined value of $16.3 billion. For the whole year, 77 shale deals were carried out, contributing $51.7 billion to the sector total. Two of the deals in the fourth quarter related to transactions involving the controversial Marcellus Shale – totaling $685 million in value – and one related to the Utica Shale, worth $372 million. The values and numbers of the deals indicate the growing importance that exploration of valuable shales is establishing in the US energy sector, with experts expecting a continuing surge in interest in profitable shale deals. Steve Haffner, a PwC energy practice partner based in Pittsburgh, said that the burgeoning exploration of lucrative shales was driving significant business.

“Throughout 2012, we continued to see a fair amount of repositioning and realignment with companies around midstream assets in the Marcellus Shale and Utica Shale as they looked to build the infrastructure needed to transport the extracted oil and gas,” he explained. “Given the disparity in commodity prices, we expect to see continued movement during the year from the Marcellus to the Utica, as the Utica is a more attractive play due to its higher liquid content.”

Roberge added that he expects the deal landscape for 2013 to see some very high-value transactions take place, with major companies – those with strong balance sheets and financial muscle – consolidating the independent companies, which still control a majority of the shale resources.

As well as the Utica and Marcellus Shales, the Bakken Shale in North Dakota saw seven deals take place in the final quarter of 2012, valued at $4.1 billion, while the Eagle Ford Shale in Texas saw six deals, with a total value of $3.1 billion, during the period.

About Merrill DataSite
Merrill DataSite is a secure virtual data room (VDR) solution that optimises the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSite’s multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.

With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organisation-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration – the highest standard for information security – and is currently the world’s only VDR certified for operations in the Europe, United States and Asia.
As the leading provider of VDR solutions, Merrill DataSite has empowered more than two million unique visitors to perform electronic due diligence on thousands of transactions totalling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions.

For more information, please contact Merrill DataSite: Tel: +44 (0)845 602 6916;

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Catherine Malone
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