Pandemic Hits Upstream M&A Hard In Q2 2020

The COVID-19 pandemic had a major impact on global M&A activity in the upstream oil and gas sector in the second quarter, according to a new report released today by Evaluate Energy in partnership with Deloitte.

The total value of deals around the world only reached $4 billion in Q2, representing a 96 per cent drop from what was an already relatively low total of $21 billion in the first quarter.


Source: Evaluate Energy M&A Review Q2 2020

Alongside this, around $10 billion-worth of in-progress deals, all agreed before the second quarter began, were affected by the pandemic in some way. Some of the deals affected included:

  • BP’s exit from Alaska for $5.6 billion
  • ConocoPhillips’ exit from Australia for $1.4 billion
  • Devon Energy’s $770 million deal to sell Barnett shale assets

The pandemic also caused a re-emergence of royalty-based deals.

In the previous significant oil price crash of 2014-2015, oil and gas companies sold many small royalty interests on producing assets as a quick cash flow solution that would not majorly impact their overall portfolio.

Fast forward to the latest oil price crisis in Q2 2020, and we saw three royalty deals make it into the top deals by value, including a $402 million Appalachian Basin sale by Antero Resources.

Evaluate Energy’s full M&A review for Q2 2020, released in partnership with Deloitte, is available to download here.