ERNST $ Young has put the transaction value in the oil and gas sector in 2012, at $402 billion, with the highest transaction coming from Nigeria.
Sinopec’s $2.5-billion acquisition of Total’s 20 per cent interest in Nigerian deep-water block OML 138 was the largest oil and gas transaction in Africa during 2012 and gave a significant boost to the average deal value.
According to the company, this value was significantly higher than the $337 billion posted in 2011 and eclipsed the previous record of $393 billion from 2010.
Ernst & Young in its Global Oil and Gas Transactions review 2012 released recently, stated that although global interest in acreage in Africa has continued, ongoing tensions and political instability may have impacted transaction activity in 2012.
It hinted that Africa’s transaction volumes increased from 93 in 2011 to 97 in 2012.
It stated, “though there has only been a moderate increase in transaction volume, reported transaction values have grown significantly, with $11.7 billion of deals in 2012, up from $7.7 billion reported for 2011.
“Looking beyond the megadeals, the 1,616 oil and gas transactions recorded in 2012 represented a marginal decrease from the 1,664 deals in 2011. A volume of 1,225 in asset deals was virtually identical to the prior-year total, while corporate deal volumes of 391 were 10 per cent lower.
“We expect 2013 to be another robust year of activity for transactions across every segment of the oil and gas value chain. There were a total of 1152 transactions in the upstream sector, marginally down three per cent from 2011, but total announced transaction values were $284 billion, up a significant 68 per cent from the prior year.
“However, the disclosed value of downstream transactions in 2012 of $42.3 billion is similar to the prior year. Based on disclosed values, the top 10 deals in the sector during 2012 had a combined value of $25.4 billion, accounting for nearly 63 per cent of the disclosed value of all transactions in the sector globally.”
Ernst & Young’s oil and gas transaction advisory services global leader Andy Brogan noted that 2013 appears to face many of the same geopolitical and economic uncertainties as 2012 and, unfortunately, these do not seem likely to be fully resolved soon.
“However, in the absence of material shocks, we currently expect the sector to continue to be resilient in mergers and acquisitions terms, as the key strategic drivers remain the same and participants have become accustomed to making decisions in a highly uncertain environment.”
He added that, while capital availability was generally improving, funding would remain a challenge for smaller companies.
Cash constraints, coupled with cost escalation, was expected to be a driver for asset and corporate opportunities.
“Those at the larger end of the scale, with stronger balance sheets, are likely to be the beneficiaries of this,” Brogan stated.
Nigeria Guardian
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