Platts recently reported what is not a surprise to this industry – that the majority of oil and gas deals are comprised of shale transactions.
In the third quarter of 2011, the total number of energy deals — upstream, midstream and downstream — more than doubled to $46.8 billion when compared with the same time last year. Shale play deals alone contributed $22.6 billion to that figure. This amount is quadruple the amount of shale deals done last year. PricewaterhouseCoopers (PwC) is responsible for the report.
“Shale-gas assets continue to attract vast interest from oil and gas companies with five of the top 10 largest deals in the third quarter involving shale plays,” Steve Haffner, a Pittsburgh-based partner with PwC’s energy practice, said in a statement.
The Marcellus Shale remains productive as both existing companies continue to develop fields and new players enter the game. The Utica shale is fast behind Marcellus, as companies realize the potential of a stacked play (the Marcellus lies atop the Utica in parts of Pennsylvania and Ohio) resulting in cost savings via shared infrastructure already built for the Marcellus.
For deals greater than $50 million, there were 24 upstream deals totaling $28.1 billion, or 57% of total energy deal value, up 52% from the previous year, PwC said. Oilfield equipment followed in deal activity, with $7.3 billion, while midstream deals contributed $10.4 billion, according to the PwC analysis.
This wave of the future was perhaps best described by Carlos Dengo, vice president of geoscience for ExxonMobil Upstream Research Company, when he said, “One example of how innovation has shaped the nation’s energy future is shale gas. Up until a few years ago, we weren’t even close to recognizing its enormous potential in this country. Technological breakthroughs and finding ways to use old technology in new ways have made it possible for vast quantities of clean-burning natural gas to be discovered. Developing and producing this resource is going to mean lots of good jobs and reliable, clean energy.”
It’s time to wake up and understand the benefits for everyone. Shale is here to stay.