The projected value of M&A transactions in the U.S. upstream sector is expected to rise for the third consecutive year, according to a study from the energy investment banking group at Raymond James.

Christopher Simon, managing director and head of asset A&D at Raymond James, said the total value of upstream E&P merger and acquisition activity so far this year has reached $41.7 billion, and that number is expected to exceed $60 billion. Speaking at Hart Energy’s A&D Strategies Workshop in Dallas earlier this month, Simon said corporate deals, so far, have accounted for $23.4 billion while asset sales are at $18.3 billion. In 2011, the total deal value was $52.5 billion.

Looking forward to the rest of the year, Simon said transaction activity is strong and growing because of an expected increase in the capital gains tax rate. Public E&P companies and Master Limited Partnerships are expected to be active buyers during the remainder of the year.

“We are going to have a very active fourth quarter. Our clients and many of the people we are talking to expect an active fourth quarter,” he said.

The implied value of the barrels of oil equivalent (BOE) in these transactions has also risen steadily since 2009. That year, the implied value of each BOE was about $10.89. To date in 2012, implied value has reached $14.54 per BOE, Simon said.

“Other than the downturn in 2008 and 2009, there has been a steady increase in transaction value as well as in implied value,” he said. Since 2010, a greater percentage of asset transactions, both in number and value, involve unconventional resources, he added.

For corporate transactions, there are some clear trends for 2012, Simon said. About 73% are from international firms for strategic reasons, such as the CNOOC Ltd. purchase of Nexen in July. About 14% come from U.S. capital sources making strategic acquisitions. About 10% come from the financial services industry or from private equity, while about 3% of deals involve taking a public company private, Simon said.

When counting the number of M&A deals so far this year, Simon said the majority of the transactions focused on unconventional assets, both for oil-weighted and gas-weighted assets. A large segment of the sellers so far in 2012 were private or private-equity firms.

When Simon studied the M&A transactions by buyer, he found that nearly 36% of them were by publicly traded E&P companies. The second largest is Master Limited Partnerships, or MLPs. The third-largest category is private E&P companies. When Simon studied the deals done so far this year by deal value, he found that private equity firms are the largest buyers, accounting for nearly 41% of all transactions.

The numbers also reflect the market’s interest in rebalancing asset portfolios away from gas-weighted production and toward oil. “This is driven by public E&P companies needing to reorient their portfolios, struggling with their IRRs (internal rates of return), selling their gas and moving into liquids opportunities,” he said.

Some fundamental changes in the A&D market have altered some of the metrics used to measure the strength and value of the deals, another analyst said.

David Marcell, managing director, Acquisitions and Divestitures, Wells Fargo Securities, said the primary drivers in the changes, which started in the 1990s, include commodity prices, technology and asset maturity. Marcell said the percentage of undeveloped reserves has increased.

As a result of these changes, he said, some of the traditional metrics do not work as effectively as they once did.

Some of the traditional metrics are still helpful for well-established basins in which geologic risks are known. As long as traditional metrics can be normalized for changes in commodity prices they are still useful valuation tools, he said.