Drilling for deals
The oil and gas sector has been one of the few in which you haven’t had to drill too deep for good M&A news during the global deals slump.
Whether you’re looking over three, six or 12-month periods, year-on-year increases in the values of transactions involving oil and gas companies look mighty impressive. In fact, the sector accounts for roughly a fifth of global deal value since August, Bloomberg-compiled data show.
This is largely down to a wave of consolidation among US explorers seeking to secure future drilling sites in the Permian Basin–the sprawling shale patch lying beneath Texas and New Mexico that’s the engine of oil production in the country.
The latest example of this comes courtesy of Diamondback Energy, which has just agreed to pay $26 billion in cash and stock to purchase its Texan neighbor Endeavor Energy Resources and create the largest Permian-focused operator.
Oil & Gas Accounts for About 20% of Deal Value Since August
Permian consolidation has been driven by the quality and availability of the shale rock in the basin. Oil wells there can be drilled and fracked for less money than in many other basins, such as the Bakken in North Dakota.
This has sparked a flurry of megadeals and other multibillion-dollar transactions in recent months, led by Exxon Mobil’s $60 billion purchase of Pioneer Resources and Chevron’s acquisition of Hess for not much less.
Demand for the black stuff remains high despite efforts to transition away from fossil fuels, with consumption forecast by some analysts to rise through 2030. And with most of the biggest US players now having bought what they want, we can expect more M&A at the middle and smaller end of the scale in oil and gas. Occidental agreed to pay north of $10 billion for CrownRock in December and we know others like Devon Energy are on the hunt for deals.
2023 was the third-biggest year on record for oil and gas M&A by value, the Bloomberg-compiled data show, and we’re already more than 300% up year-on-year in 2024. A purple patch for energy dealmakers, indeed. —Fareed Sahloul and Kiel Porter
M&A focus
Vitol agreed to buy a controlling stake in refiner Saras from the family of Italian billionaire Massimo Moratti, in a deal which will increase the commodities trading giant’s exposure to the lucrative Mediterranean market. The deal values Saras at about €1.7 billion.
The founding family of Tod’s is teaming up with buyout firm L Catterton in a new attempt to take the company private, with a bid that values the Italian luxury brand at about €1.4 billion. The deal has spurred chatter of consolidation among smaller luxury firms operating in a market dominated by a handful of heavyweights.
Gilead has agreed to purchase CymaBay, a developer of an experimental liver disease drug, for $4.3 billion in equity value. Gilead is seeking new areas for growth to supplement its core antiviral drug franchise.
Blackstone plans to merge a pair of warehouse landlords it took private to create one of the UK’s largest owners of industrial property, a move that could potentially pave the way for the entity’s eventual sale or an IPO, writes Jack Sidders.
Private equity pulse
Private equity funds last year returned the lowest amount of cash to their investors since the financial crisis 15 years ago, hampering buyout firms in their efforts to launch new investment vehicles, write Swetha Gopinath and Kat Hidalgo.
Pace of PE Distributions Drops to More Than Decade Low
Distributions to limited partners totaled 11.2% of funds’ net asset value, the lowest since 2009 and well below the 25% median figure across the last 25 years, according to the investment bank Raymond James.
Got a tip or want to send in questions? Email dealsnews@bloomberg.net, or Tweet/DM @bloombergdeals or any of our reporters.
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