Midstream oil and gas deals activity, including mergers and acquisitions, increased globally by 10 transactions in the first quarter of 2015.
Data from GobalData’s quarterly midstream deals review shows that mergers and acquisitions accounted for 23% and 38% of the total number of midstream deals and deal value in the first quarter of the year. There were 32 transactions totalling $30.7 billion (€27.3 billion).
However, the amount represents a 35% decrease from the same number of transactions in the fourth quarter of 2014.
GlobalData’s head of oil and gas research and consulting Matthew Jurecky says that the Americas led the merger and acquisition and asset transactions with a total value of $31.1 billion (€27.6 billion) from 38 deals.
Jurecky says: ‘The midstream sector’s top deal in Q1 2015 was Energy Transfer Partners’ agreement to merge with Regency Energy Partners to form one of the industry’s largest master limited partnerships.
‘In addition to expected cost savings of more than $160 million (€142 million) per year, the revenues generated from incremental gathering and processing volumes will help counter lower commodity prices.
‘As evident in Kinder Morgan’s acquisition of Hiland last quarter, access to upside from some of the Lower 48’s most resilient plays, such as the Marcellus, Eagle Ford and West Texas, is driving deals. Capital spending and development is most sensitive to upside from improved economics through a price rebound or otherwise.’
‘Activity is now above Q1 2014 levels, after a low in Q3 2014 prior to the oil price crash. As the tougher business environment has led to constrained cash flow, capital is sought in the debt market to fund ongoing capital programs and repay other obligations.’