$1 billion-plus cash-based mergers increasingly common in upstream sector

High value corporate mergers in the global upstream sector are becoming increasingly cash based.

Based on 2023 merger deals valued at over US$1 billion, all but one agreed by publicly listed companies worldwide have included cash as part of the transaction.

This is in stark contrast to 2020 and 2021 during the pandemic, where cash played a much smaller role, said Eoin Coyne, Senior M&A Analyst at Evaluate Energy.

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“The percentages here for cash-based deals in 2022 and 2023 would be normal if we were looking at asset deals or acquisitions by private companies, but it’s highly unusual for corporate mergers of this value by public companies.

“There is just so much cash on-hand for larger producers. Last month’s $4.9 billion all-cash acquisition of Neptune Energy by Eni and Var Energi in Europe was the latest example.”

This is not to say that stock-based deals aren’t happening at all, however, added Coyne.

“Chevron’s agreement to acquire PDC Energy is an all-stock arrangement and ranks as 2023’s largest upstream deal so far. And when we looked at data for corporate acquisitions by public companies valued at less than $1 billion, all-stock deals have held at a long-term average of between 25-40% in both 2022 and 2023.”

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below. 

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