The Marcellus and Utica shales aren’t drawing near the attention they have been, according to a review of 4Q2012 mergers and transactions (M&A) in the United States by PwC US.

Using U.S. transaction data compiled by IHS Herold Inc., PwC’s researchers reviewed quarterly information for M&A valued at more than $50 million. The final three months of 2012 helped to lift 2012’s total number of deals to 204, representing $146.2 billion in total value. Private equity (PE) investments were at an all-time high last year, and master limited partnerships (MLP) also rose.

However, deals last year came at a slow pace, with M&A activity in 4Q2012 accounting for nearly one-third of the year’s total transactions. The total value of the late-year deals, $56.2 billion, was well below the year-ago quarterly transactions, which were tallied at $79.1 billion. And deals overall in 2012 also slowed in the former hotbeds of activity, the Marcellus and Utica shales.

Unlike 2011, when shale and related infrastructure lifted domestic M&A (see Shale Daily, Feb. 4, 2011), deals in 2012 weren’t based on one particular trend, but on several: PE interest, foreign buyers, unconventional plays, and by companies attempting to finalize transactions before the end of the year.

According to data, there were only seven Marcellus transactions last year with total values of $5.2 billion. Marcellus action is close to half of what it was in 2011, when 11 deals were announced that were worth $9.6 billion. In 2010, 18 deals representing close to $20 billion were unveiled in the Northeast play. The average for a Marcellus transaction also fell from a high of $1.6 billion in 2Q2010 to $342 million in 4Q2012.

The Utica didn’t bring as much attention either in 2012. A younger play than the Marcellus, the Utica in 2012 saw four deals with total value of $1.3 billion, compared with six transactions valued at $5.9 billion in 2011.

Last year, “we continued to see a fair amount of repositioning and realignment with companies around midstream assets in the Marcellus Shale and Utica Shale as they looked to build the infrastructure needed to transport the extracted oil and gas,” said PwC’s Steve Haffner, a Pittsburgh-based partner. “Given the disparity in commodity prices, we expect to see continued movement during the year from the Marcellus to the Utica, as the Utica is a more attractive play due to its higher liquid content.”

In the final three months of 2012, the biggest unconventional play deals were in North Dakota’s Bakken Shale, seven deals worth $4.1 billion, and in the Eagle Ford Shale, six worth $3.1 billion.

According to PwC, 27 deals with values of more than $50 million — a total of $16.3 billion — were related to unconventional plays in 4Q2012, which was an increase from the 22 shale-related deals in 4Q2011. However, the total deal value was flat.

Upstream and midstream shale-related transactions rose year/year in 4Q2012 with 17 deals worth $9 billion — one more than in 4Q2011, but below the year/ago total value of $12.3 billion. There also were 10 midstream deals in 4Q2012 worth $7.3 billion, an increase from the six worth $4 billion in 4Q2011.

In total 2012 had “77 shale-related deals that contributed $51.7 billion, an increase of two deals when compared to full year 2011, but a drop from the $72.7 billion in shale deal value from 2011,” according to the report. Included in the quarterly shale-related transactions were two in the Marcellus Shale with a total deal value of $685 million and one Utica Shale deal worth $372 million.

“M&A activity in the U.S. oil and gas sector was extremely robust in 2012, with the vast majority of that activity happening in the final three months of the year as many deals got pulled forward due to the uncertainty surrounding the fiscal cliff,” said PwC’s Rick Roberge, principal in the energy M&A practice. “This past year was a watershed moment for the industry, with private equity involvement reaching an all-time high, shale deal volume at a two-year high during the fourth quarter, and a jump in asset transactions as companies have shifted their focus to adding more profitable liquid rich shale plays to their portfolios.”

The upstream accounted for more than half (53%) of the 40 4Q2012 transactions, which represented $38 billion, or 68%, of total quarterly values. There were 22 upstream oil transactions, compared with five natural gas deals; 21 midstream deals contributed $10.9 billion. Nine downstream transactions in the final quarter added $5.9 billion, while oilfield services contributed five worth $1.4 billion.

“We expect to see a slight pause in M&A during the first part of 2013 as companies focus on the recent wave of deals announced, but believe 2013 will be another banner year for deals as the U.S. oil and gas industry is ripe for continued consolidation.” He noted that PwC’s recent Global CEO Survey found that energy chiefs are “among the most confident on growth prospects for this year than any other industry.”

Throughout 2013, “we believe the fundamentals are in place for continued transactions, including the potential for some very large deals to get done,” Roberge said. “The combination of independents [that] still control the majority of resources, and the majors [that] have strong balance sheets and financial muscle may result in consolidation, as the capital requirements to develop shale plays continues to grow. We also expect PE to remain active in new investments.”

PE activity in 2012 marked an all-time high at 34 transactions representing $28.4 billion. In 4Q2012 alone, there were 11 financial sponsor-backed deals worth $6.9 billion, slightly off from the 13 PE deals in 4Q2011, which totaled $13.6 billion. “Additionally, there were 170 strategic deals in all of 2012 that contributed $117.8 billion, compared to 163 strategic deals in 2011 with a total deal value of $136.5 billion,” said Roberge.

MLPs last year were involved in 42 transactions, representing more than 20% of total annual activity. MLP activity has grown over the past two years, representing 18.4% in 2011 and 15.6% in 2010. And foreign buyers announced nine deals in 4Q2012 that contributed $3.2 billion, but the amount was well below values of the seven deals in 4Q2011 that totaled $10.4 billion.