Sellers of established Canadian reserves in 2003 received a median average of nearly C$10 per barrel of oil equivalent (BOE), setting a new record a fourth consecutive year, according to an analysis by Calgary-based investment-banking firm Sayer Securities Ltd. Reserves fetched an average of C$9.33 per BOE, up from C$8.31 in 2002, the firm reported. "Established reserves" are proved reserves plus half of those deemed probable, before royalties. (For more on the Canadian M&A marketplace, see "To Buy or to Sell" in this issue.) "This was the highest price recorded since Sayer Securities began publishing merger and acquisition (M&A) statistics in 1988," says Tom Pavic, an analyst with the firm. The 2003 average price is nearly double that of 1999. "The obvious influence on the acquisition price [in 2003] was high commodity prices, especially for natural gas. In 1999 the average AECO-C gas price was C$2.92 per million Btu, and for 2003 it was C$6.70, a 129% increase," Pavic reports. There were also fewer Canadian assets and companies available for purchase in 2003 than in prior years, he adds. "In 2003 the total enterprise value of M&A transactions was C$9.1 billion. This is the lowest value since 1994 when the total was C$7.1 billion." There was no lack of demand last year, though. "In 2003 there were 135 large transactions-more than C$5 million in size-compared with 143 in 2002. This suggests demand was still strong in the M&A market in 2003." There was only one multi-billion-dollar Canadian deal last year-the Canadian Oil Sands Trust !=purchase of EnCana Corp.'s interest in the Syncrude project for a total of C$1.5 billion. There was only one multi-billion-dollar U.S. deal (in U.S. dollars) in 2003 too: the Devon-Ocean merger. By comparison, total 2002 Canadian activity included the C$15.9-billion merger of PanCanadian Energy and Alberta Energy (forming EnCana). "Removing this blockbuster transaction from that year's statistics, the total M&A value for 2002 was C$9.5 billion, only 4% higher than the value in 2003," Pavic says. Royalty income trusts (RITs) continued in 2003 to make a mark on the Canadian M&A market-their purchases totaled C$4.5 billion in 2003, or 50% of the total. By comparison, in 2002 they were responsible for C$3.4 billion of deals-or a third when excluding the PanCanadian-Alberta Energy merger.
Recommended Reading
Seatrium Awarded Contract for FPSO Bound for Guyana’s Stabroek
2024-05-17 - The topsides fabrication and integration contract will be for the FPSO Jaguar, bound for the Whiptail Field in the Stabroek block offshore Guyana for Exxon Mobil.
Seadrill Sells Three Jackups for $338MM to Gulf Drilling International
2024-05-17 - Seadrill Ltd. is also selling its 50% equity interest in the joint venture that operates the rigs offshore Qatar.
Third Suriname Find for Petronas, Exxon Could Support 100,000 bbl/d FPSO
2024-05-17 - A recent find offshore Suriname in Block 52 by Petronas and Exxon Mobil could support a 100,000 bbl/d FPSO development, according to Wood Mackenzie.
US NatGas Flows to Freeport LNG in Texas Seen at Five-month High, LSEG Data Shows
2024-05-17 - The startup and shutdown of Freeport and other U.S. LNG export plants often has a major impact on global gas prices.
US Drillers Add Oil, Gas Rigs for First Time in Four Weeks: Baker Hughes
2024-05-17 - The oil and gas rig count rose by one to 604 in the week to May 17.