Global merger and acquisition (M&A) activity among oil and gas companies in the first three months of the year jumped to its second highest dollar volume in two years, PLS Inc. said this week.

Nearly $48 billion exchanged hands in 157 transactions over the quarter, with the most transactions in the United States, said PLS. The industry researcher and transactions firm, which is based in Houston, worked with its international partner Derrick Petroleum Services to compile the report.

“Capital requirements needed to develop sizeable property packages long-term plays a significant role on oil and gas transactions announced during 1Q2010,” said PLS research director Richard Mason. “The trend is providing buyers access to promising plays globally while sellers have opportunities to monetize future assets for cash, or, alternatively, join with partners to defray development costs.”

The trend toward more deal flow began late last summer in anticipation of a global economic recovery, according to PLS.

“Continuing interest in transactions suggests a market featuring attractive assets at reasonable prices in the wake of strong crude oil performance,” said the report. “Oil-biased deals represented 58% of dollar volume globally while asset deals increased dramatically to 65% of total deal value and corporate deals accounting for the remaining 35%.”

The latest transactions stand “in contrast to the sharp bias during 2009 toward corporate transactions, which represented 70% of deal value. The share of corporate transactions in 2007 and 2008 was very similar to that in 1Q2010.”

Regionally, North America led the world in natural gas and oil transactions, with total deal volume of $23.8 billion, or half of the transactions by dollar volume. The United States and Canada accounted for 116 of the 157 deals reported for the quarter, or roughly three-quarters of the transactions.

In dollar value, North America was followed by the Former Soviet Union ($9.7 billion), Africa ($7.02 billion), South America ($3.5 billion), and Australia ($3.4 billion).

“One new wrinkle in 1Q2010 involved continued global expansion among Chinese national oil companies (NOCs) who found entree into international markets through joint venture arrangements,” noted PLS.

The BP plc/Devon Energy Corp. $7 billion transaction, in which Devon sold its remaining deepwater Gulf of Mexico holdings and its share of a Caspian Sea project, “led all deals globally,” the report found (see Daily GPI, March 12).

“BP now has a commanding acreage position in the Gulf of Mexico’s emerging Paleogene play and a platform from which it can compete head to head with rival ExxonMobil for the leading spot among international oil companies (IOCs) in global production,” said PLS.

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