US oil mergers drop to $12bn as volatility limits deals

A horizontal drilling rig on a lease owned by Parsley Energy operates at sunrise in the Permian Basin near Midland, Texas US August 24, 2018. REUTERS/Nick Oxford

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  • US oil deals fall apart as buyers and sellers clash over price
  • Transactions fall to $12 billion, almost a third of the same period last year

NEW YORK, July 14 (Reuters) – U.S. oil and gas deals fell to $12 billion last quarter, down from the first quarter and nearly a third of $34.8 billion recorded at the same period a year ago, the volatility of commodity prices leaving buyers and sellers. clash over asset values, according to data released Thursday by energy analyst firm Enverus.

“The spike in commodity prices that followed Russia’s invasion of Ukraine temporarily stalled mergers and acquisitions as buyers and sellers disagreed on the value of assets,” he said. Andrew Dittmar, director of Enverus Intelligence Research.

Benchmark U.S. crude oil futures jumped to over $123 a barrel in early March following Russia’s invasion of Ukraine, but prices have since fallen as recession worries fade to the bottom. foreground. But strong prices last quarter sparked interest from private equity firms in mergers and acquisitions and spurred some deals, Dittmar said. Private equity sellers accounted for about 80% of the quarter’s total deal value, according to Enverus data.

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PRICE RESISTANCE

This year’s oil prices have led to a rush among private investors to put properties on the market across the US shale patch, Dittmar said.

“The challenge is finding buyers willing to pay their asking prices,” Dittmar added.

The Permian Basin of West Texas and New Mexico accounted for 46% of deal value last quarter, making it the most active oil and gas region in the United States. The Rockies followed with 12%, the midcontinent with 6%, the US Gulf Coast with 5% and the West Coast with 2%, according to Enverus data. The offshore Gulf of Mexico, eastern United States and Alaska saw no transactions.

About a third of the deal’s total value came from a merger between privateer Colgate Energy Partners III and Centennial Resource Development (CDEV.O).

Other top-priced deals last quarter included a $1.3 billion deal between Gray Rock Investment Partners and Executive Network Partnering Corp to form Granite Ridge Resources.

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Reporting by Laila Kearney in New York; Editing by Josie Kao

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