Deal making hit a whole new altitude earlier this year with three corporate oil and gas transactions worth $13.4 billion in the span of one week dubbed by analysts at Tudor, Pickering, Holt & Co. as “merger mania.” (Source: Hart Energy/Shutterstock.com)
Deal making among U.S. oil and gas producers remained at a sometimes unrelenting pace this past year with over $83.5 billion worth of notable transactions announced or completed.
Overall, 2018 was the Year of Consolidation as several E&Ps agreed to merge throughout the U.S. Outside the monster $10.8 billion divestiture of BHP Billiton Ltd.’s (NYSE: BHP) U.S. shale assets, the U.S. upstream industry saw 21 M&A transactions worth roughly $45 billion in 2018.
The Permian Basin might have taken home the gold—Concho Resources Inc.’s (NYSE: CXO) $9.5 billion purchase of RSP Permian—and silver—Diamondback Energy Inc.’s (NASDAQ: FANG) $9.2 billion rollup of Energen—medals for the two largest M&A deals of 2018, but, this year, deal making was consistently more widespread.
A wave of transactions worth roughly $4.2 billion even reached the oft-overlooked Gulf of Mexico (GoM) in 2018. Minerals A&D activity also struck a fever pitch this past summer with a duo of minerals mergers totaling more than $1.2 billion announced in the span of one week.
However, by early November, deal making hit a whole new altitude with a massive deals week of three corporate oil and gas transactions worth $13.4 billion.
Analysts at Tudor, Pickering, Holt & Co. (TPH) called the week “merger mania” and just the “tip of the M&A iceberg that will emerge in 2019.”
2018 M&A Activity | |||||
| Quarter Announced | Buyer | Seller | Value ($MM) | Asset Location | Month Closed |
| 1Q 2018 | Concho Resources | RSP Permian | $9,500 | Permian Basin | |
| 3Q 2018 | Diamondback Energy | Energen | $9,200 | Permian Basin | |
| 4Q 2018 | Encana | Newfield Exploration | $7,700 | Multibasin (Scoop/Stack) | |
| 4Q 2018 | Chesapeake Energy | WildHorse Resource Development | $3,977 | Eagle Ford | |
| 4Q 2017 | Talos Energy | Stone Energy | $1,900 | US Gulf of Mexico | |
| 4Q 2018 | Denbury Resources | Penn Virginia | $1,700 | Eagle Ford | |
| 4Q 2018 | Cimarex Energy | Resolute Energy | $1,600 | Permian Basin | |
| 3Q 2017 | Alta Mesa Resources (f/k/a Silver Run Acquisition) | Alta Mesa Holdings; Kingfisher Midstream | $1,400 | Anadarko Basin (Scoop/Stack) | |
| 3Q 2018 | Diamondback Energy | Ajax Resources | $1,245 | Permian Basin | |
| 3Q 2018 | Kosmos Energy | Deep Gulf Energy | $1,225 | US Gulf of Mexico | |
| 4Q 2017 | Oasis Petroleum | Forge Energy | $946 | Permian Basin (Delaware) | |
| 2Q 2018 | Falcon Minerals | Royal Resources Partners | $800 | Eagle Ford | |
| 4Q 2017 | HighPoint Resources (f/k/a Bill Barrett) | Fifth Creek Energy | $649 | D-J Basin | |
| 1Q 2018 | Admiral Permian Resources | Three Rivers Operating III | $640 | Permian Basin (Delaware) | |
| 3Q 2018 | PennEnergy Resources | Rex Energy | $600.5 | Appalachia | |
| 2Q 2018 | Kimbell Royalty Partners | Haymaker Minerals & Royalties | $404 | Multibasin | |
| 2Q 2018 | Triple Crown Resources | Broad Oak Energy II | $400 | Permian Basin | |
| 3Q 2018 | Eclipse Resources | Blue Ridge Mountain | $345 | Appalachia | |
| 2Q 2018 | Cox Oil Offshore | Energy XXI Gulf Coast | $322 | US Gulf of Mexico | |
| 4Q 2017 | Eclipse Resources | Travis Peak Resources | $92.2 | Appalachia (Utica) | |
| 3Q 2018 | Talos Energy | Whistler Energy II | $52 | US Gulf of Mexico | |
| 2Q 2018 | Venado Oil & Gas | Texas American Resources | N/A | Eagle Ford | |
| Source: Hart Energy | |||||
“Buckle up as the upstream merger train has left the station and next year will likely be a wild ride,” TPH analysts said in a Nov. 1 research note following Encana Corp.’s (NYSE: ECA) announcement that it would merge with Newfield Exploration Co. (NYSE: NFX).
“We can easily think of more than 10 additional deals where there should be a strategic asset rationale or cost synergies that would make sense heading into 2019,” the TPH analysts continued. “These names would represent over $38 billion in market cap and $1.2 billion in G&A [savings] alone.”
M&A activity in the GoM is also expected to pick up going into 2019 as a lengthy list of assets for sale continues to grow, according to a recent report by energy consultancy group Wood Mackenzie (WoodMac).
Despite a healthy number of positions in the GoM already sold in 2018, WoodMac expects more assets will be added to the for-sale list. Private-equity players are likely to want to sell as their assets in the GoM get closer to maturation, while established players may continue to shed noncore positions.
“There appears to be plenty for sale in deepwater Gulf of Mexico,” said William Turner, senior research analyst at WoodMac. “We believe the quality of the assets is high. If oil prices co-operate, we could see a thriving M&A market in 2019.”
Still, 2018 deal making was not without its casualties: Earthstone Energy Inc.’s (NYSE: ESTE) $950 million acquisition of Midland Basin private operator Sabalo Energy LLC was recently terminated.
In a statement regarding the termination, Earthstone CEO Frank A. Lodzinski commented, “Despite the high quality of the Sabalo assets and the outstanding opportunity the transaction provided Earthstone, the drastic change in commodity prices and in the debt and equity markets has negatively affected the significant merits of the acquisition. Accordingly, we have mutually agreed to terminate the contribution agreement.”
Further, it remains to be seen if other transactions fall victim to the market’s cold shoulder as about $15.3 billion worth of the mergers in 2018 have yet to close.
| Notable A&D Deals From 2018 | |||||
| Quarter Announced | Buyer | Seller | Value ($MM) | Asset Location | Month Closed |
| 3Q 2018 | BP | BHP Billiton | $10,500 | Multibasin | |
| 1Q 2018 | Magnolia Oil & Gas (f/k/a TPG Pace Energy) | EnerVest | $2,660 | Eagle Ford | |
| 3Q 2018 | Flywheel Energy | Southwestern Energy | $2,303 | Fayetteville | |
| 3Q 2018 | Encino Acquisition Partners | Chesapeake Energy | $2,000 | Appalachia (Utica) | |
| 4Q 2018 | Vantage Energy | QEP Resources | $1,725 | Williston Basin (Bakken) | |
| 2Q 2018 | Diversified Gas & Oil | EQT | $775 | Appalachia | |
| 4Q 2017 | Venado Oil & Gas | Cabot Oil & Gas | $765 | Eagle Ford | |
| 4Q 2018 | Aethon Energy | QEP Resources | $735 | Haynesville | |
| 1Q 2018 | Fieldwood Energy | Noble Energy | $710 | US Gulf of Mexico | |
| 1Q 2018 | Enduring Resources | WPX Energy | $700 | San Juan Basin | |
| 2Q 2018 | Comstock Resources | Akoma Drilling; Williston Drilling | $620 | Williston Basin | |
| 2Q 2018 | Callon Petroleum | Cimarex Energy | $570 | Permian Basin (Delaware) | |
| 1Q 2018 | Fleur de Lis Energy | Devon Energy | $553 | Barnett | |
| 2Q 2018 | California Resources | Chevron | $513.3 | San Joaquin Basin | |
| 1Q 2018 | BCE-Mach; Camino Natural Resources | Chesapeake Energy | $500 | Anadarko Basin (Mississippi Lime) | |
| 1Q 2018 | Northwoods Energy | SM Energy | $500 | Powder River Basin | |
| 4Q 2018 | DJR Energy | Encana | $480 | San Juan Basin | |
| 2Q 2018 | Ascent Resources | Utica Minerals Development | $477 | Appalachia (Utica) | |
| 1Q 2018 | SK Innovation | Longfellow Nemaha | $453 | Anadarko Basin (Stack) | |
| 2Q 2018 | Ascent Resources | CNX Resources | $400 | Appalachia (Utica) | |
| 2Q 2018 | Ascent Resources | Hess | $400 | Appalachia (Utica) | |
| 1Q 2018 | ConocoPhillips | Anadarko Petroleum | $400 | Alaska North Slope | |
| 4Q 2017 | Oil Search | Armstrong Oil & Gas; GMT Exploration | $400 | Alaska North Slope | |
| 3Q 2018 | Matador Resources | U.S. BLM | $387 | Permian Basin (Delaware) | |
| 2Q 2018 | Total; Equinor | Cobalt International Energy | $339 | US Gulf of Mexico | |
| 4Q 2018 | Diamondback Energy | ExL Petroleum; EnergyQuest II | $312.5 | Permian Basin (Midland) | |
| 3Q 2018 | Merit Energy | BHP Billiton | $300 | Fayetteville | |
| 4Q 2018 | Undisclosed | Range Resources | $300 | Appalachia | |
| 2Q 2018 | Whiting Petroleum; Riverside Energy | Oasis Petroleum | $283 | Williston Basin | |
| 1Q 2018 | Colgate Operating; Luxe Energy | Concho Resources | $280 | Permian Basin (Delaware) | |
| 2Q 2018 | Undisclosed | ConocoPhillips | $250 | Multibasin | |
| 4Q 2017 | EP Energy | Carrizo Oil & Gas | $245 | Eagle Ford | |
| 2Q 2018 | ConocoPhillips | Undisclosed | $235 | Austin Chalk | |
| 2Q 2018 | Stone Energy | Anadarko Petroleum; Exxon Mobil; Royal Dutch Shell | $234 | US Gulf of Mexico | |
| 3Q 2018 | Lime Rock Resources | ConocoPhillips | $230 | Barnett | |
| 2Q 2018 | Ascent Resources | Salt Fork Resources | $223 | Appalachia (Utica) | |
| 1Q 2018 | Sundance Energy Australia | Pioneer Natural Resources; Reliance Industries | $221.5 | Eagle Ford | |
| 1Q 2018 | Tanos Energy Holdings III | WildHorse Resource Development | $217 | Louisiana | |
| 3Q 2018 | Carrizo Oil & Gas | Devon Energy | $215 | Permian Basin (Delaware) | |
| 1Q 2018 | Liberty Mutual Investments | ExL Petroleum Management | $207 | Permian Basin | |
| 3Q 2018 | Undisclosed | Pioneer Natural Resources | $201 | Raton Basin | |
| 1Q 2018 | Halcón Resources | Royal Dutch Shell | $200 | Permian Basin (Delaware) | |
| 3Q 2018 | Magnolia Oil & Gas | Harvest Oil & Gas | $191 | Eagle Ford | |
| 2Q 2018 | Vitesse Energy | Undisclosed | $190 | Williston Basin (Bakken) | |
| 1Q 2018 | Scout Energy Partners | Linn Energy | $119.5 | Permian Basin | |
| 4Q 2018 | Vermilion Energy | Massif Oil & Gas | $186 | Powder River Basin | |
| 4Q 2018 | Diversified Gas & Oil | Core Appalachia Holding | $183 | Appalachia | |
| 4Q 2018 | Undisclosed | Parsley Energy | $170 | Permian Basin (Midland) | |
| 2Q 2018 | Petro-Hunt | SM Energy | $160.9 | Williston Basin (Bakken) | |
| 3Q 2018 | Middle Fork Energy Partners | QEP Resources | $155 | Uinta Basin | |
| 3Q 2018 | Northern Oil and Gas | Pivotal Petroleum II | $151.8 | Williston Basin (Bakken/Three Forks) | |
| 2Q 2018 | Osaka Gas | Sabine Oil & Gas | $144.53 | Cotton Valley/Haynesville | |
| 1Q 2018 | Undisclosed | Centennial Resource Development | $141 | Permian Basin (Delaware) | |
| 4Q 2017 | Verdad Oil & Gas | Carrizo Oil & Gas | $140 | D-J Basin | |
| 2Q 2018 | Matador Resources | Jetstream Oil and Gas | $132.8 | Permian Basin (Delaware) | |
| 1Q 2018 | Silverpeak Altamont Energy | Linn Energy | $132 | Utah (Altamont Bluebell Field) | |
| 4Q 2018 | Undisclosed | Pioneer Natural Resources | $132 | Sinor Nest (Lower Wilcox) | |
| 2Q 2018 | Undisclosed | SM Energy | $131.4 | Permian Basin | |
| 3Q 2018 | Whiting Petroleum | Undisclosed | $130 | Williston Basin (Bakken/Three Forks) | |
| 2Q 2018 | USG Energy Producer Holdings | Comstock Resources | $125 | Eagle Ford | |
| 4Q 2017 | Scout Energy Partners | Linn Energy | $122 | Midcontinent | |
| 3Q 2018 | Undisclosed | Bonanza Creek Energy | $117 | Cotton Valley | |
| 4Q 2018 | Kimbell Royalty Partners | Undisclosed | $107.8 | Multibasin | |
| 1Q 2018 | Revolution Resources | Gastar Exploration | $107.5 | Midcontinent | |
| 4Q 2017 | Halcón Resources | BTA Oil Producers | $104 | Permian Basin (Delaware) | |
| 4Q 2018 | SRC Energy | Undisclosed | $96.8 | D-J Basin | |
| 1Q 2018 | Centennial Resource Development | OneEnergy Partners | $95 | Permian Basin (Delaware) | |
| 1Q 2018 | Diversified Gas & Oil | Alliance Petroleum | $95 | Appalachia | |
| 1Q 2018 | ConocoPhillips | Amelia Resources | $87 | Austin Chalk | |
| 1Q 2018 | Penn Virginia | Hunt Oil | $86 | Eagle Ford | |
| 1Q 2018 | Diversified Gas & Oil | CNX Resources | $85 | Appalachia | |
| 2Q 2018 | Energy Resources 12 | Bruin E&P Partners | $82.5 | Williston Basin | |
| 2Q 2018 | Evergreen Natural Resources | Pioneer Natural Resources | $79 | Raton Basin | |
| 3Q 2018 | Equinor | Texegy | $75 | Austin Chalk | |
| 3Q 2018 | Undisclosed | Ultra Petroleum | $75 | Uinta Basin | |
| 1Q 2018 | Undisclosed | Extraction Oil & Gas | $72 | D-J Basin | |
| 4Q 2018 | Undisclosed | Riviera Resources | $68 | Arkoma Basin | |
| 1Q 2018 | Lilis Energy | OneEnergy Partners Operating | $65 | Permian Basin (Delaware) | |
| 2Q 2018 | Undisclosed | EQT | $64 | Permian Basin | |
| 4Q 2017 | Chaparral Energy | Undisclosed | $60 | Anadarko Basin (Stack) | |
| 2Q 2018 | Carbon Natural Gas | Old Ironsides Energy | $57 | Appalachia | |
| 1Q 2018 | Undisclosed | Parsley Energy | $57 | Permian Basin | |
| 3Q 2018 | Undisclosed | W&T Offshore | $56.8 | Permian Basin | |
| 3Q 2018 | PetroShale | Undisclosed | $55 | Williston Basin (Bakken) | |
| 2Q 2018 | Presidio Petroleum | Midstates Petroleum | $58 | Anadarko Basin | |
| 1Q 2018 | Undisclosed | Blue Ridge Mountain Resources | $56 | Appalachia | |
| 4Q 2018 | Undisclosed | Devon Energy | $50 | Barnett | |
| Source: Hart Energy | |||||
Emily Patsy can be reached at epatsy@hartenergy.com.
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