Author: Mark Young

Green power M&A: 74 GW of wind capacity changes hands

New data from Evaluate Energy shows that 74 GW in existing and future wind power generation capacity has changed hands in 222 M&A transactions around the world in 2020. Both figures are significant upticks on 2018 and 2019 activity in the sector.

The top 10 wind deals between January 1, 2020 and Feb 15, 2021 can be downloaded for free at this link.

“The majority of the deals are for projects in progress and future capacity, rather than existing projects generating power right now,” says Eoin Coyne, Senior M&A Analyst at Evaluate Energy.

“With new and bolder climate targets being set all the time by nations and corporations around the world, being part of the wind sector’s growth is clearly an attractive prospect for acquirers and investors alike right now.

“A clear appetite is growing for the wind sector, with upticks in deal counts and the power generation capacity involved in M&A deals growing year-over-year between 2018 and the end of 2020, even with the pandemic taking hold last year.

“This wind sector’s deal activity over the past year stands in stark contrast to oil and gas markets, where, as our recent analysis showed, the pandemic was responsible for a sharp downturn in activity across the board.”

As for 2021 activity so far, Evaluate Energy data shows that wind sector deal counts are currently on pace to match 2020 figures at this very early stage. The deals have so far been for typically smaller assets, however, with just 1.75 GW acquired up to and including February 15.

The top 10 wind sector deals ranked on generation capacity between January 1, 2020 and February 15, 2021 were responsible for 44% of the total capacity acquired over the same timeframe. Details on these deals is available for free download at this link.

This analysis was created using the Evaluate Energy M&A database, which began including green power and renewable energy sector transactions in 2016. Find out more here.

2020 Upstream Deals Reach “Almost Unthinkable” Total of $93 billion

Evaluate Energy’s new M&A report shows that $93 billion in upstream oil and gas deals were agreed in 2020, with the bulk of the sum found in low-premium corporate mergers in North America agreed in the latter period of the year.

The full report, which looks at all major deals and investment trends across a remarkably turbulent year for the oil and gas industry, is available for free download at this link.

Total 2020 deal values dropped 48% on the $180 billion secured in 2019 – making it the lowest annual spend since 2015. What may be more surprising is that it got as high as $93 billion by year’s end.

“While it is easy to focus on the relatively low value and equally low deal counts, getting anywhere approaching a total of $100 billion seemed almost unthinkable in the early stages of the pandemic,” said report author Eoin Coyne, Senior M&A Analyst at Evaluate Energy.

“Take Q2 for instance; when demand was being destroyed and oil temporarily traded at a negative value, the deal total for that three-month stretch stood at just $4 billion.”

This year’s annual upstream M&A review from Evaluate Energy analyses the major deals from 2020, including:

  • Acquisitions by Chevron, ConocoPhillips and Devon Energy in the U.S.
  • The major Canadian oilsands deal that saw Cenovus Energy merge with Husky Energy
  • A multi-billion reverse-takeover arrangement in the U.K. North Sea
  • The recent asset sale in West Africa by France’s Total


U.S. and Canada dominate upstream sector deals in Q4 2020

Deals in the United States and Canada were responsible for around 84% of the $93 billion in upstream deals agreed worldwide in Q4 2020, according to the latest data from Evaluate Energy.

A list of the top 10 countries, ranked by value of Q4 E&P deal activity, and details on the largest deal to be agreed last quarter in each country, is available for free download at this link.

For our full review of all 2020 M&A activity, download Evaluate Energy’s latest M&A report at this link.

“Canada made up 25% of all North American deals thanks primarily to the major oilsands merger of Cenovus Energy and Husky Energy and a handful of lower-value corporate acquisitions by Whitecap Resources and Tourmaline Oil,” said Eoin Coyne, Senior M&A Analyst at Evaluate Energy. “This was the first time Canada accounted for more than 20% of both North American deal totals and global deal totals since Q2 2018.”

The United Kingdom, thanks almost entirely to a reverse takeover agreement that will see Chrysaor Holdings merge with Premier Oil Plc, was the only other country to see over $1 billion in new deals agreed. Colombia, Egypt, Israel and Russia also made the top 10 list.

The full top 10 ranking is available for download at this link. The data shows the total value of all upstream deals agreed in the top 10 countries. The top individual deal for each country is also included.

Evaluate Energy is headquartered in London and specializes in global oil, gas and renewable energy intelligence.

Q4 upstream deals reach US$43 billion – but don’t let the numbers fool you

Five multi-billion-dollar deals made Q4 2020 one of the highest value quarters for upstream M&A in recent memory, totaling US$43 billion based on new research from Evaluate Energy.

ConocoPhillips, Pioneer Natural Resources and Diamondback Energy all made huge moves towards the end of a year of turmoil for oil and gas. Recent pricing stability and indications of increased capital expenditure in 2021 are providing some relief for embattled producers and suppliers.

The full Q4 M&A deals list is in Excel format for free download

Our M&A report for the full year 2020 is available for download now too.

“Deal activity had begun to pick up in Q3, especially in North America, having dried up almost entirely after March in the upstream sector,” said Eoin Coyne, Senior M&A Analyst at Evaluate Energy in London. “That late Q3 period saw a series of friendly, low-premium mergers agreed. This trend continued strongly in Q4 to boost overall industry spending.”

The fourth quarter saw the largest Canadian deal of the year agreed: Cenovus Energy’s merger with fellow oilsands producer Husky Energy.

“The quarter saw $43 billion in new E&P deals around the world,” added Coyne. “At first blush this looks like a major uptick in activity, even going back a few years. The top 10 deals, however, made up 88% of the total quarter value by themselves, meaning that Q4 only really saw an uptick in spending, rather than deal-making activity in general.”

The full list of top 10 deals includes data on acquisition costs and how much equity, if any, was included in agreed payment structures. The data also shows how much production was involved in each deal. Download it here.

Evaluate Energy is headquartered in London and specializes in global oil, gas and renewable energy intelligence. It is a sister brand of the Daily Oil Bulletin.


New data: Canada prominent in decade’s Top 10 E&P oil and gas deals

Three Canadian upstream M&A deals rank in the 10 largest E&P transactions by acquisition value around the world in the past decade, according to new data from Evaluate Energy.

U.S., Russian deals also appear prominently alongside the largest deal of the decade, Shell’s acquisition of BG that included assets from all over the world.

Click here for a free Excel download of the full Top 10 deal list.

“Despite 2020 being a down year for many in the upstream space to say the least, it was also interesting to see a couple of 2020’s corporate mergers in the United States break into the top 10,” said Eoin Coyne, senior M&A Analyst at Evaluate Energy. “ConocoPhillips’ – who make the list as both an acquirer and a target in two separate high value deals – and Chevron’s recent mergers with Concho Resources and Noble Energy, respectively, were the deals that made the cut.

“The other high-profile, high-value mergers from last year ranked just outside the top 10, including Cenovus Energy’s acquisition of Husky Energy, and Devon Energy’s acquisition of WPX in the U.S.”

Canada’s three deals made up 16% of the combined $296 billion value of all 10 deals. CNOOC Ltd.’s acquisition of Nexen in 2012 is the largest Canadian deal over the past 10 years. At a value of ~US$18 billion, this deal ranks fourth in total value on a global scale.

The full list of the top 10 deals, which includes data on acquisition costs, details on how much equity was involved in the deal and how the value of that equity increased or decreased between announcement and deal completion, can be downloaded here.

Evaluate Energy is headquartered in London and specializes in global oil, gas and renewable energy intelligence.


France top M&A target for European wind power deals

Fresh analysis from Evaluate Energy’s M&A team shows that France currently leads a busy European market in 2020 focused on wind power sector mergers and acquisitions.

Evaluate Energy renewable energy deal data shows that, so far, Europe has seen 100 deals agreed for wind power assets in 2020. France accounts for one fifth of activity. The U.K. ranks just behind with 16 deals corporate mergers or asset acquisitions, followed by Germany, Sweden and Norway.

Source: Evaluate Energy M&A

France also leads other European nations in terms of the power generation capacity involved in this year’s wind power deals. So far this year, France has seen deals for stakes in over 5.6 GW of wind projects. Only 10% of this value was comprised of existing, producing projects, with the bulk of deals focused on projects under development.

Source: Evaluate Energy M&A

“The U.K. and Sweden have similar profiles to French activity when it comes to deal-making in the wind sector,” said Eoin Coyne, Evaluate Energy’s lead M&A analyst. “Most of 2020’s deals were made for projects under development.”

“In contrast, Spain – which is by far Europe’s leader when it comes to solar power deals in 2020 – and Portugal also rank highly here when it comes to wind power capacity changing hands, but the majority of this capacity in both nations is already producing,” he continued. “Germany ranked highly on deal count but does not appear in this capacity ranking as the deals there were all for small scale projects, relatively speaking.”

In terms of key developments for the sector at large, Coyne pointed to the activity of one of the traditional oil and gas supermajors as something to keep a close eye on.

“Looking at the more high-profile activity through the lens of the ‘energy transition’ here, it is interesting to see Total’s involvement in the European wind sector,” he said. “Our data shows that Total has been involved in deals including 1.6GW of future production capacity in France and the U.K. in 2020 and was the only traditional oil major to really make any significant impact on the M&A market for European wind power at all this year.”

“Total also played a large part in Spain’s 8.0 GW of solar power sector deals this year, acquiring a 1.2GW project portfolio in September,” he concluded.

Evaluate Energy’s M&A database includes data on every deal made in the global power and wider energy sectors.


M&A Q3 2020 – Canada sees resurgence in upstream deals

Canadian upstream activity sprung to life in Q3 with a series of deals agreed involving ConocoPhillips, Canadian Natural Resources and Whitecap Resources, based on Evaluate Energy’s latest M&A report, available here.

Overall spend in Canada exceeded $900 million and could have been even higher if Obsidian’s rejected approach to merge with Bonterra had been successful.

These values signal a sharp increase on previous quarters but lag historic averages and obviously pale in comparison to the Cenovus-Husky mega deal agreed recently to kick off Q4.

“In the first six months of 2020, the largest individual E&P deal to be agreed in Canada saw Spartan Delta Corp. acquire Bellatrix Exploration’s assets via a bankruptcy process for around US$77 million,” said Eoin Coyne, Senior Analyst at Evaluate Energy and report author.

“In total, the Canadian upstream space had recorded just over $350 million in new deals by the end of June.

Source: Evaluate Energy Q3 M&A Report

“Canada’s recovery in the third quarter was mirrored by the wider oil market and global economy in that substantial recoveries have taken place since full lockdowns were lifted. It must be noted, however, that even with the huge Cenovus-Husky deal being agreed in early Q4, activity levels remain relatively muted in the Canadian market as a whole, compared to levels of M&A activity seen in years past.”

The full Evaluate Energy report, released again in partnership with Deloitte, is available to download here.

Major Canadian deals agreed in Q3:

  • ConocoPhillips acquires Montney acreage from Kelt Exploration: ConocoPhillips reaffirmed that Canadian oil and gas remains an ongoing part of its strategy with a US$390 million purchase of liquids-rich Montney acreage from Kelt. Kelt will look to pay off all debt with the cash generated.
  • Canadian Natural Resources acquires Painted Pony Energy: CNRL acquired Painted Pony Energy Ltd. for US$344 million – a value that includes roughly US$261 million in Painted Pony debt that was present on its most recently released balance sheet. Painted Pony’s production is heavily gas weighted, bringing a greater level of diversification to CNRL’s portfolio.
  • Whitecap Resources acquires NAL Resources from Manulife: Whitecap Resources acquired NAL Resources from Manulife Financial Corp. in an all-stock deal worth $110 million. All-stock deals and corporate takeovers more akin to friendly mergers were a key feature of Q3 deals globally.

Evaluate Energy’s latest M&A report includes analysis on all major deals agreed this quarter. It includes details of acquisitions agreed in the U.S. with very friendly merger terms, plus analysis on an interesting cash generating arrangement for Antero Resources in West Virginia and an overview of recent West African deals involving Total, Woodside and Cairn Energy.


M&A Q3 2020 – Financial squeeze prompts U.S. oil company consolidation

Weak demand related to COVID-19 is hurting company finances and resulted in a series of U.S. upstream deals much more akin to friendly mergers than aggressive takeovers.

That is a key takeaway from Evaluate Energy’s latest M&A report – available to download here – that analyses all major upstream deals globally in Q3 2020.

The third quarter saw $24 billion in deals – a significant uptick on the historic low of just $4 billion recorded in Q2. Friendly U.S. mergers, or mergers of equals, featured heavily.

Source: Evaluate Energy Q3 M&A Report

“These mergers are characterized by acquisitions where the share premium is either non-existent or is far lower than the usual level required to convince target company shareholders to part with shares,” said Eoin Coyne, Senior Analyst at Evaluate Energy and report author.

“The drop in oil demand and price has strained company finances and pushed some into viewing the safe harbour of a larger, better leveraged company as the best option.”

The Evaluate Energy report, released again in partnership with Deloitte, examines three recent U.S. deals in particular:

  • The proposed acquisition of Montage Resources by Southwestern Energy that will be conducted at a discount of the day-prior trading price;
  • The consideration for Devon Energy’s acquisition of WPX Energy represents a premium of just 3%; and
  • The quarter’s largest deal that saw Chevron acquire Noble Energy at just an 8% premium

“This industry consolidation is a trend that is likely to continue should the oil price remain below the break-even level required by many producers,” added Coyne.

Evaluate Energy’s latest M&A report includes analysis on all major deals agreed this quarter. The report includes details on a major increase in Canadian activity, analysis on an interesting cash generating arrangement for Antero Resources in West Virginia, and an overview of recent West African deals involving Total, Woodside and Cairn Energy.


Cenovus-Husky combination joins North America’s Top 10 producers

The combination of Cenovus Energy Inc. and Husky Energy Inc. will create one of North America’s top 10 producers.

Using production figures quoted by all publicly-quoted North American producers at the end of Q2, the merged Cenovus/Husky produced 660,000 boe/d in North America during the three months ended June 30, 2020.

At the end of June, Cenovus was the 13th largest producer in North America, while Husky was 35th (see note 1). Using Cenovus’s previous ranking as a starting point, the merger vaults the pairing five places higher into the top 10 and over fellow oilsands producer Suncor Energy Inc.

The top 10 ranking has been adjusted using the Evaluate Energy M&A database for deals that have taken place since the end of June. All figures quoted below assume deals that are currently in progress will all be completed.

M&A activity has also seen a major move of seven places up the rankings for ConocoPhillips. The company is currently working through the $13.4 billion (including debt) acquisition of Concho Resources Inc. in the U.S. and has already completed the $390-million acquisition of Montney production in Canada from Kelt Exploration Ltd. The two deals add around 334,000 boe/d to ConocoPhillips’s Q2 North American production of 526,000 boe/d, meaning it now ranks fifth among producers in the U.S. and Canada.

Devon Energy Corporation’s merger with WPX Energy Inc. means that combination will join Cenovus in rising five places in the rankings from Devon’s previous spot, while other key acquisitions by Chevron Corporation, Pioneer Natural Resources and Southwestern Energy see each of these acquirers move up too.

For more analysis on the Cenovus-Husky merger, visit our partners at the Daily Oil Bulletin at the following links:

Top 20 North American producers (boe/d)

Source: Evaluate Energy F&O and Evaluate Energy M&A. All production is quoted after royalties where possible, except for Cenovus-Husky combination and the 51,000 boe/d addition of Painted Pony production to CNRL. Production outside of North America is not included in this table.

Note 1: The exact ranking pre- and post-merger for Cenovus and Husky is slightly murky, as the two producers only quote production on a pre-royalty basis, while every other producer in the table has been ranked based on post-royalty production for as fair a comparison across the entire group. This means that Cenovus and Husky production figures will be slightly higher than the other producers in the top 20, purely because they are reported on a different basis. Husky’s production in Asia is not included in any of the analysis above.

Update: 28/10: Chevron agreed a deal to sell its 450 mmfe/d (75,000 boe/d) Appalachian Basin assets to EQT Corp for $735 million. Chevron’s ranking in the table was unaffected, but assuming the deal completes then EQT would leapfrog the Cenovus-Husky combination into 8th place with the extra production.

Q2 2020 – Highest Cost Natural Gas Producers in North America

Painted Pony Energy Ltd. was one of North America’s highest cost natural gas producers prior to its acquisition by Canadian Natural Resources Ltd. (CNRL) in October, based on fresh data from Evaluate Energy.

This analysis was conducted using Q2 2020 operating and transportation expenses per barrel (“production costs”) for some of the most heavily gas-weighted, publicly listed producers in Canada and the United States.

Click here for a free download of production cost data for all 20 companies in this analysis

In summary:

  • All 20 companies produced over 10,000 boe/d in Q2 2020.
  • The companies were selected for this natural gas cost analysis because their portfolios were among the more heavily gas-weighted among companies producing at least 10,000 boe/d in Q2 2020. This avoids oil and liquids production skewing the analysis.
  • The companies produced in North America only; oilsands producers were excluded.
  • U.S. production tax costs are excluded; so, too, are Canadian royalty expenses.

Low cost production is a key indicator that investors will be looking at to help identify healthy gas producing companies in the current climate. For more on the low cost producers of the group, click here.

The most recent production cost data and key conclusions are presented below.

Source: Evaluate Energy

Overall portfolios must be considered

The trend line on the chart, calculated using the production costs of all companies in the group, shows that as oil weighting increases, so does the average cost per barrel of oil equivalent to produce for each company.

Therefore, if one company was producing at $2/boe higher than another this might not make it a “higher cost operator”. It may be because oil makes up a higher proportion of its portfolio.

To illustrate this we examined costs reported both by Cabot Oil & Gas (COG) in the U.S. Appalachian Basin and Crew Energy (CR), a Montney-producer in Canada.

  • On the face of it, it appears that Crew is a much higher cost operator at $6.82/boe compared to Cabot’s $4.51/boe.
  • In fact, both companies sit almost exactly on the trend line, meaning that Crew’s higher cost per boe can be attributed almost entirely to the higher percentage of liquids in its portfolio.

Examining costs per boe alone can be misleading. When deciding if a company is a producer with high production costs, these metrics must be considered relative to the company’s overall portfolio.

Based on the combined metrics of costs per boe and each company’s oil weighting, we have identified the highest cost producers based on Q2 2020 data.

Highest cost natural gas producers

At around $9.00/boe, Painted Pony Energy Ltd. (PONY) was the highest cost operator relative to its portfolio in Q2 2020. Its costs – almost a full $4.00/boe over the trend line – increased in 2020 after around $2.30/boe related to capital facility fees appeared in its income statement. This relates to certain finance lease obligations in February 2020 now recognized as operating not finance expenses. Canadian Natural Resources finalized its acquisition of Painted Pony in October, stating that Painted Pony’s assets would complement CNRL’s natural gas portfolio in key areas and provide opportunities for cost synergies via pre-built infrastructure and transportation.

Chesapeake Energy (CHK) recorded the highest cost per boe at $9.40, due to high costs associated with its NGL production. Fellow Appalachian Basin producer EQT Corp. (EQT) recorded the cost furthest from the trend line among U.S. gas producers. EQT’s $7.49/boe was around $2.50/boe higher than the trend line’s expected production costs for a company with a portfolio comprised of 6% liquids. EQT’s costs can be attributed to relatively high processing costs compared to other producers in the peer group.

Among the other Canadian companies, Alberta-focused Pine Cliff Energy (PNE) registered the highest cost after Painted Pony’s $9.00/boe at $8.60/boe. Among the costs included in this analysis, Pine Cliff’s highest costs are its operating expenses, which made up 88% of its production costs in Q2.

Click here for a free download of production cost data for all 20 companies in this analysis

Evaluate Energy data allows a comprehensive review of liquidity and company health. Alongside these production cost metrics, data includes debt and interest measures, credit availability figures, hedging portfolios and earnings guidance.