Deal volume in the upstream industry decreased by 30% in the third quarter of 2019 vs. the second, according to a recent report from GlobalData, a data and analytics company. M&A and capital raising value in the upstream fell by 50% from the previous quarter’s $126.8 billion, totaling $63.4 billion.

The largest M&A deal of the third quarter was the sale of BP Plc’s Alaska business to Hilcorp Energy Co. It involves the sale of its upstream and midstream business in Alaska for a hefty $5.6 billion, marking BP’s departure from the Alaska scene.

“The transaction is in line with Hilcorp’s historical strategy of acquiring mature fields from major oil corporations and slashing costs,” GlobalData’s analysts noted. According to the firm, BP’s net oil production from Alaska in 2019 was projected to average almost 74,000 bbl/d. The upstream assets include interests in Prudhoe Bay (26%), Milne Point (50%), Point Thomson (32%), the Liberty project (50%) and nonoperating interests in exploration leases in the Arctic National Wildlife Refuge.

As for capital raising, the top deal in the third quarter was Petroleos Mexicanos’ public offering of notes for gross proceeds of $7.5 billion, according to the report. “The company intends to use the net proceeds from the offering for its general corporate purposes, including the repayment of short-term loans,” GlobalData said.

Capital raising through equity offerings alone also tumbled, from $14.5 billion in the second quarter of 2019 to $1.2 billion in the third. Equity offerings fell 17% in number over the same period. Debt activity mirrored equity’s performance.

“Capital raising, through debt offerings, registered a decrease of 17% in the number of deals and a marginal increase in deal value with 43 deals, of a combined value of $30 billion, in the third quarter, compared with 52 deals, of a combined value of $29.1 billion, in the previous quarter,” according to Praveen Kumar Karnati, an oil and gas analyst with GlobalData.

Private equity/venture capital deals in the upstream were fewer in number in the third quarter but larger in overall value vs. the second-quarter tallies. Ten deals had a combined value of $1.4 billion compared with 13 deals with a value of $504.2 million total in the previous quarter.

Conventional M&A deals, of which there were 90 in the third quarter, had a combined value of $13.7 billion. The unconventional market hosted 36 deals with a combined value of $17.1 billion.

For the year-ago third-quarter period, upstream M&A deal value was $46.7 billion, and the deal count was 290. For upstream capital-raising deal value, the year-ago value was $36.7 billion, and the deal count was 180. The second quarter of 2019 represented a sharp rise for both upstream capital raising and M&A deal value.

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