Recently, our firm's Calgary office completed a review of M&A themes and deal terms in the oil and gas sector for the first half of 2014. This study contains a list of oil and gas M&A transactions over the six month period, 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:
International assets managed in Canada led the hit parade in the
first six months of 2014, both by number and deal value. The second
largest international deal of the period was larger by value than
all the other domestic deals combined. Other notable features
included
the following:
- The period saw a rebound in activity from 2013 (by 33%), but not a return to the levels of 2012 (about one-third below 2012)
- Service deals dwindled - only one deal was completed in the period and it involved the acquisition of a related-party
- Financial buyers completed no transactions in the first half of 2014
- There were no acquisitions of domestic targets by international buyers
- There was some topping activity in the first half, a phenomenon that was absent in 2013
- Generally, the sales processes were not frantic and involved the usual mix of stories that unfolded quickly and others that went on for more than a year
- Cash went from comprising some or all of 68% of deals in 2013 to just 43% in the period
- Deal completion time crept up, with 29% of the deals running over 70 days, against 18% in 2013, but this was likely a function of more foreign-law deals
- Changes in deal terms were mixed, but there was some bias to improved conditions for targets from 2013, perhaps reflecting market conditions
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.
