May 2023 oil and gas deals exceeded the value of May 2022 deals despite fewer transactions, according to a report by S&P Global Market Intelligence.
There were 24 deals in May this year, but they had a combined value of $30.33 billion, compared with 37 deals with a combined value of $6.29 billion in the same period last year, according to data of the business intelligence firm. Nine asset transactions totaling $4.55 billion were recorded in May 2023, compared to 33 asset transactions with an aggregate value of $2.85 billion in May 2022.
ONEOK acquisition
The biggest transaction so far this year is ONEOK’s acquisition of Magellan Midstream Partners in a deal worth nearly $19 billion. In May, ONEOK said it would acquire all of Magellan’s outstanding units in a cash and stock transaction valued at approximately $18.8 billion, including assumed debt, “resulting in a combined company with a total enterprise value of 60,000 million dollars.”
Magellan will merge with a newly created subsidiary, 100 percent wholly owned by ONEOK, and the acquisition “creates a more resilient energy infrastructure company that is expected to produce stable cash flows through multiple cycles of commodities,” the companies said.
“The combination of ONEOK and Magellan will create a diversified US midstream infrastructure company with predominantly fee-based revenue, a strong balance sheet and significant financial flexibility focused on providing essential energy products and services to our customers and a strong continued performance to investors,” said ONEOK President and CEO Pierce H. Norton II.
“Our expanded product platform will present more opportunities in our core businesses, as well as enhance our ability to participate in the ongoing energy transformation with a greater presence in the sustainable fuel and hydrogen corridors. We are excited about the future of our combined companies and we look forward to welcoming Magellan’s respected employees to ONEOK,” Norton added.
Chevron’s acquisition of PDC Energy
The second-biggest deal of 2023 so far is Chevron Corp’s purchase of PDC Energy for nearly $8 billion, according to S&P Global. In May, Chevron said it had entered into a definitive agreement with PDC Energy to acquire all of PDC’s outstanding shares in an all-stock transaction valued at $6.3 billion, or $72 per share. Based on Chevron’s May 19 closing price and under the terms of the deal, PDC shareholders will receive 0.4638 Chevron shares for each PDC share, Chevron said, adding that the total value of the ‘company, including debt, of the transaction was $7.6 billion.
Chevron said in a statement that the acquisition of PDC provides it with high-quality assets that are expected to provide higher returns in less carbon-intensive basins in the US. PDC brings strong free cash flow, low production and development opportunities alongside Chevron’s position in the DJ Basin, as well as additional acreage to Chevron’s leading position in the Permian Basin, said the company
Enverus director Andrew Dittmar told Rigzone in an earlier report that the deal makes Chevron an even more formidable operator in Colorado “by adding an additional 275,000 net acres to the significant DJ position the company acquired in 2020 with its purchase of Noble Energy.”
ConocoPhillips Asset Deal
The largest 2023 asset deal to date is ConocoPhillips’ purchase of the remaining 50 percent of the Surmont oil sands project in Alberta from Total E&P Canada Ltd. for about 3 billion dollars.
“Long-lived, low-maintenance capital assets like Surmont play an important role in our deep, durable and diverse low-cost-to-supply portfolio. Ultimately, we expect to leverage our position as a 100% owner and operator of Surmont to further optimize the asset as we move toward our overall long-term emissions intensity goals,” said Ryan Lance, president and CEO of ConocoPhillips.
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