GlobalData: midstream M&As in 1Q15

GlobalData, a leading research and consulting firm, reports that midstream oil and gas deals activity, including capital markets and Mergers and Acquisitions (M&A), increased globally from 129 transactions in 4Q14 to 139 in 1Q15.

According to GlobalData’s latest quarterly midstream deals review, M&A accounted for 23% and 38% of the total number of midstream deals and deal value in 1Q15, respectively, with 32 transactions totalling US$30.7 billion.

However, this value represents a 35% decrease from the US$47.4 billion acquired from the same number of transactions in 4Q14.

Matthew Jurecky, GlobalData’s Head of Oil & Gas Research and Consulting, states that the Americas remained the regional frontrunner in terms of M&A and asset transactions in 1Q15, with a total value of US$31.1 billion from 38 deals.

Jurecky says: “The midstream sector’s top deal in 1Q15 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 US$160 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.”

GlobalData’s report adds that there were 20 asset transactions reported globally in the midstream sector in 1Q15, down from 25 in 4Q14. However, the total value for these deals doubled from US$1.8 billion to US$3.6 billion during this period.

Similarly, both capital-raising through the debt market and financing through private equity and venture capital registered significant increases in value between 4Q14 and 1Q15.

Jurecky continues: “Nine companies issued more than US$10 billion in debt last quarter. Offerings were led by Williams, with US$4.5 billion, followed by Energy Transfer Partners and Kinder Morgan, with US$3 billion and US$2.5 billion, respectively.

“Activity is now above 1Q14 levels, after a low in 3Q14 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.”

Edited from source by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/15052015/globaldata-midstream-mas-in-1q15/