The drop in global energy industry transaction values to $303.6billion in 2000 from $360.2 billion a year earlier, was actually a”return to normal” following several mega-mergers in 1999,according to a John S. Herold Inc. study. The upstream globalmerger and acquisition transaction values totaled $112.2 billion in2000, down 16% from $152.9 billion in 1999.

Rising natural gas prices created “sea changes in reserve valuesand deal weighting during the year,” said Herold vice presidentChristopher Sheehan. “Worldwide implied oil and natural gas reservevalue climbed 50% from the first quarter of 2000 to the fourthquarter,” he said. “In North America, which accounted for 83% oftotal transaction value, the oil and natural gas reserve weightingshifted from 75% oil during the first quarter of 2000 to 70%natural gas in the fourth quarter.”

The study showed that worldwide power industry transaction valueslipped slightly in 2000 to $119.5 billion from $126.8 billion in1999. Increased gas pipeline activity ignited a 24% increase inmidstream deal value to $32.3 billion in 2000, up from $25.9billion a year earlier. Also, poor petrochemical margins that driedup merger and acquisition activity triggered a plunge in downstreamtransaction value to $19.7 billion in 2000 from $43.1 billion in1999.

For the oilfield equipment and services industry, E&Pexpenditures climbed, as deal value reached $16.6 billion in 2000from $9.7 billion in 1999. Coal transactions in 2000 totaled $3.3billion.

The Herold database of 2000 activity found that theChevron/Texaco merger was “by far the biggest upstreamtransaction,” valued at $44.8 billion. Anadarko’s acquisition ofUnion Pacific Resources was second at $7.9 billion, followed byPhillips Petroleum’s purchase of ARCO and BP’s Alaskan oil assets($7 billion); ENI’s takeover of LASMO ($5.6 billion); and RoyalDutch/Shell’s $4.3 billion acquisition of Woodside Petroleum.

The El Paso Energy/Coastal merger was the top midstream activityat $16 billion, and BP’s purchase of Burmah Castrol was the topdownstream deal ($5.6 billion). Power listings were led by FPLGroup and Entergy’s $14 billion merger. Transocean Sedco Forex’stakeover of R&B Falcon was the top oilfield equipment andservices merger at $8.9 billion.

For more information about the study, visit the Website atwww.herold.com.

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