Recently, our firm's Calgary office completed a review of
M&A themes and deal terms in the oil and gas sector for 2013.
This study contains a list of oil and gas M&A transactions over
the last year, a review of key trends in deal terms, a summary of
notable features of each transaction, an analysis of the timelines
and a numerical analysis of key deal terms.
A few key themes emerged from our review:
The year started slowly with nine deals announced in H1. The
market announced 10 deals in H2, trailing the equity uptick that
occurred in the last half of the year by some distance. This made
for a long 12 months for public equity holders, management,
employees and advisors. The landscape in 2013 was dominated by
privatizations, financial buyers, service deals and very small
transactions. Domestic and international strategic buyers were
absent from the market and were responsible for the dramatic
decline in activity. The highlights were colourful, but somewhat
There was a steep decline in M&A activity involving public
targets. In 2012, 30 deals were completed or announced.
In 2013, only 19 made the cut.
Large deals have completely vanished and transaction values
have plummeted. In 2013, the largest deal in our survey was worth
$935 million, while in 2012 the largest deal tipped the scales at
over $18 billion.
The total value of deals in 2013 was $2.4 billion - only 6.3%
of the total value of deals announced in 2012. Half of all of the
deals of 2013 were worth less than $50 million.
In 2013, 12 deals were completed by strategics, and seven were
completed by financials. Financials did only two deals in 2012.
73% of deals (by number) in 2013 involved E&P targets and
17% involved service companies. There were no midstream
In 2013 there were seven deals (or 36% of the total) that
involved acquisitions of targets by large shareholders or
management, an unusually large proportion of the total number of
deals. In 2012, only one deal was initiated by management or a
Poland entered the Canadian industry through two deals, with
Kulczyk Oil's acquisition of Winstar Resources and ORLEN
Upstream's acquisition of TriOil Resources. Asia Pacific was
quiet on the corporate front, with only one deal – Yanchang
Petroleum acquired Novus Energy.
Novel structures were used in the acquisitions of Winstar
Resources (by Kulczyk Oil), RIA Resources (by Qwest Contrarian
Fund) and Wenzel Downhole (by Basin Tools). Both the acquisitions
of Bonnetts Energy (by Mill City Capital) and
Zedi (by 1779958 Alberta Ltd.)
involved management rolling over its equity. Buyers did not shy
There was no topping or contested activity in 2013 that reached
the level of public disclosure.
Two complex corporate stories – Compton and Wenzel
Downhole – came to an end as public entities.
This survey does not cover private M&A activity (both
corporate and asset), or joint ventures and asset sales by public
companies, which remained fairly strong, fueled by big company
rationalization and new equity funding. Public shareholders are not
at the party, but the good times continue to roll for some
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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