Oil and Gas Deals Outpacing 2015 as Exxon Acquires InterOil

  • Sector’s M&A in North America reaches $43.9 billion this year
  • 2015 had lowest level of mergers and acquisitions since 2004

Exxon Mobil Corp.’s agreement to buy InterOil Corp. boosted deal activity this year well beyond 2015, but don’t expect a big surge.

North American oil and gas deals this year reached $43.9 billion, according to data compiled by Bloomberg. That outpaces $39.4 billion in activity for the same period last year. It’s not a high threshold -- 2015 as a whole marked the lowest level since 2004.

"I was expecting to stay about flat," said Brian Youngberg, an energy analyst at Edward Jones in St. Louis, talking about deals activity. "You’re not going to see companies actually bought in their entirety."

Large corporate deals face a hurdle: Not many companies are desperate to sell, and those that are just aren’t big enough to move the needle, Youngberg said. Asset sales, which make companies more geographically focused, are likely to continue to be the trend, he said.

In a sense, Exxon’s deal is also about acreage, Youngberg said. It will add discoveries in Papua New Guinea that will feed the company’s existing export plant there. The company will pay between $45 and $71.87 per share of InterOil, depending on how much gas InterOil’s Elk-Antelope field holds.

Even with property changing hands, mergers and acquisitions will likely stay flat because companies are looking inward.

"Why take on acquisitions when we can focus on what we have?" he said.

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