Driven by North America's shales, global merger and acquisition (M&A) transactions within the exploration and production (E&P) sector climbed to $45 billion in the first three months of the year, Evaluate Energy said Tuesday.
The UK-based consultant's Global M&A database, which tracks E&P transactions on a daily basis, found that total deal values in 1Q2011 were "higher than all but three quarters over the past three years."
North America "re-emerged as the key player" in 4Q2010 and again in 1Q2011 after giving up the crown to Latin America in 3Q2010, the study found. "During 1Q2011 North America accounted for 45% of the deal value with over $20 billion worth of activity."
More than three-quarters of the deal value (78%) in the first three months came from shale resources. PetroChina International Ltd.'s $5.4 billion deal to acquire a 50% stake in Encana Corp.'s Cutbank Ridge assets in the Montney Shale of British Columbia topped the list (see Shale Daily, Feb. 11).
"In a similar vein to the Indian government, China has taken an interest in the North American shale sector due to the possibility of developing their own undeveloped domestic resources," the report said. "With a near monopoly of shale expertise existing in North America, government-backed Asian companies have been aggressively luring partners in the U.S. and Canada to gather the required unconventional production techniques."
China demonstrated its intent to "master" domestic shale extraction in the first quarter, with state-owned China National Petroleum Corp. drilling the country's first horizontal shale gas well, noted Evaluate Energy.
Recently, consultants at Deloitte LLP said joint ventures in North American shale plays give foreign companies a stepping stone to eventual ownership of U.S. energy companies (see Shale Daily, April 1).
Another noteworthy entrant in early 2011 into North America's shales was Australia's BHP Billiton Ltd., which paid $4.75 billion in cash to acquire Chesapeake Energy Corp.'s interests in the gas-weighted Fayetteville Shale play (see Shale Daily, April 4). The deal also represented the first successful major acquisition for BHP since its failed attempts to acquire Rio Tinto late last year, said the report.
The PetroChina and BHP "major shale gas deals, which dominated the total value for the sector, showed that there is still an appetite for shale gas resources despite subdued gas prices," said the authors. "In terms of the number of deals, however, the oil-weighted Bakken and Eagle Ford plays have been dominant with over 40% of shale deals coming from these two plays."
The move by companies to acquire more oil versus gas-weighted shale properties may continue, as long as gas prices remain "suppressed" because of North America's oversupply of gas and because of its current lack of liquefied natural gas export facilities, the report said.