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US Megadeals Play Vital Role in World Oil and Gas Industry

Date

12 May 2016

Sections

Euro & Finance
Global Europe
Trade & Society

Three megadeals closed in the US within the past year ensured that the global transaction volume for merger and acquisition activities in the oil and gas sector remained high. With a global transaction volume of 151 billion euros, 2014 has been a record-breaking year but with 148 billion euros the year 2015 remains only close behind. With deal volumes of 20, 18 and 16 billion eurosrespectively, the three megadeals executed in the US made up for  more than a third of the total global transaction volume in 2015. Indeed, these transactions were the third, fourth and fifth largest transactions ever recorded in the American market. These are the results ofrecent studies accomplished by the Centre for European Economic Research (ZEW), based on the Zephyr database of Bureau van Dijk (BvD).

However, the most recent megadeal in this sector, was recorded on European soil (not included in the graph). With a value of around 60 billion euros, the takeover of the Reading-based English BG Group by Royal Dutch Shell in February 2016 was the largest takeover in the oil and gas sector for ten years. While the transaction volume remains high, the number of transactions reported is, however, clearly decreasing.

After 444 transactions in 2014, in 2015 only 264 deals were documented. “This is down to the recently observed cautious behaviour in the industry,” explains Niklas Dürr, researcher in the ZEW Research Group “Competition and Regulation”. After more than one year of depressed oil and gas prices, the sector has now entered a new period of uncertainty and realignment. Dürr goes on explaining, “as no large price increases are expected in the mediumterm, corporations prefer to hold onto their cash, rather than engage in risky ventures.”

In addition, especially American fracking firms have incurred large debts as a result of significant investments made in recent years. In case of a takeover, debts must be taken over by the acquirer, which clearly inhibits transfers. According to Niklas Dürr, “this development will result in a cooling-down of the market following the latest megadeals.”

 

For further information please contact:

Niklas Dürr, Phone +49(0)621 1235 386, E-mail duerr@zew.de

The Mannheim Centre for European Economic Research (ZEW)

ZEW is one of Germany’s leading economic research institutes and enjoys a strong reputation throughout Europe. The institute works in the field of frontier empirical research in economics and maintains important scientific data bases, e.g. the Mannheim Innovation Panel (MIP) and the ZEW Start-up Panel. ZEW is integrated into an extensive international network of universities and research institutions. ZEW’s key objectives are to conduct excellent economic research, provide science-based economic policy advice and transfer knowledge. ZEW was founded in 1991 and employs a staff of approximately 190, two thirds of whom are researchers.

Research at ZEW:

Labour Markets, Human Resources and Social Policy; Industrial Economics and International Management; Information and Communication Technologies; International Finance and Financial Management; Environmental and Resource Economics, Environmental Management; Corporate Taxation and Public Finance; International Distribution and Redistribution; Competition and Regulation

www.zew.de  / www.zew.eu

About Bureau van Dijk

Bureau van Dijk (BvD) is the leading provider of private company, corporate ownership and deal information. BvD’s  product range combines data from regulatory and other sources, including 140 information partners, with flexible software to allow users to manipulate data for a range of research needs and applications. Its Orbis database provides information on 200m companies across the globe.

In addition, BvD addresses specific business challenges through its range of Catalysts, including transfer pricing, credit, procurement, KYC, client on-boarding, M&A research and valuations, while BvD custom delivers bespoke solutions.

The company has a global presence with over 30 offices worldwide. For more information on BvD, visit www.bvdinfo.com. Twitter: @bureauvandijk and @bvdusZephyr is the world's largest database containing key figures and information about 1.4 million deals and rumoured transactions. Further information is available at http://www.bvdinfo.com/de-de/our-products/economic-and-m-a/m-a-data/zephyr    

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