U.S. mergers and acquisitions totaled $1.9 billion in 36 transactions announcements during the third quarter, compared with $3.1 billion in 38 transactions during the second quarter, according to Houston-based upstream acquisition and divestiture advisory firm Randall & Dewey Inc. For the first nine months of 2002, deal announcements totaled $6.6 billion in 127 transactions. "The marked slow-down in activity had a corresponding negative effect on implied reserve values," the firm adds. For the nine months, values averaged $5.50 per barrel of oil equivalent (BOE), down from $5.67 during the first six months. In the third quarter alone, the implied reserve value was $4.62 per BOE, compared with $5.61 in the second quarter and $5.77 the quarter earlier. "This steady downward trend...will mark 2002 as the first year since 1996 that [values have] been below $6.00 per BOE," the firm reports, adding that reserve values and commodity prices appear to have separated: reserve values are down this year while product prices are up. Contributing to the decline in reserve values are volatile commodity prices and the lack of huge, quality assets on the market. Meanwhile, the firm forecasts new deal-making as a result of another disconnection: higher commodity prices but lower oil-company stock prices. The two have divorced since just about every U.S. stock plummeted beginning this summer. Meanwhile, oil-stock prices are down despite $28 oil on the Nymex and $4 gas. Already as a result of lower stock prices, Anadarko Petroleum Corp. is picking up Howell Corp. for $200 million in cash, and Unocal Corp. has bought Pure Resources for the equivalent of approximately $22 per Pure share. "Were it not for the seemingly risk-adverse climate brought on by international and other market uncertainties, the sharp drop in the stock market would no doubt spark another round of industry consolidation as companies look the world over to sort out acquisition opportunities," Randall & Dewey reports. "From a seller's viewpoint, it might be an advantageous time to act while commodity prices are strong and there is pent-up demand for opportunities. How long can oil prices remain near $30?" Other assessments in the report: • In Canada, third-quarter activity included 35 announcements totaling $1.3 billion for an implied reserve value of US$8.07 per BOE, bringing the nine-month count to 91 transactions totaling US$9.4 billion for an implied reserve value of US$5.16 per BOE. The values were affected by an Acclaim Energy Trust acquisition at US$9.39 per BOE and one by Provident Energy Trust at US$9.27. • In non-North American transactions, there were 14 announcements during the third quarter, totaling US$3.8 billion for an implied average reserve value of US$2.24 per BOE, bringing the nine-month count to 55 announcements totaling US$21.6 billion for an implied average reserve value of US$3.28 per BOE. Worldwide, the firm counted 267 deals in the first nine months for a total reserve value of $31.7 billion. Of the total, $6.6 billion was for U.S. companies and assets.