Oil and natural gas deal activity spiked to the highest level in more than a decade as the upstream sector and interest by foreign investors picked up but transaction values remained muted.
The most active shale plays with deals greater than $50 million should be no surprise. The Eagle Ford saw five deals with worth $3 billion. The Bakken and Permian plays each had three deals, with Bakken transactions totalling $863 million and the Permian $276 million.

Collectively, the Big Three generated $4.1 billion in deals, according to a report by PricewaterhouseCoopers (PwC).
The Utica Shale generated one deal, the second-largest in value in the first-quarter 2014, at $924 million. The Niobrara contributed a single deal worth $180 million.

Upstream shale deals continue to represent a sizeable share of global oil and gas deals. In the first-quarter 2014, 14 shale transactions accounted for $5.7 billion, or 29% of total, global upstream deal value.

“First-quarter shale deal activity was on par with what we anticipated as we see the continued shift towards unconventionals,” said John Brady, a Houston-based partner with PwC’s energy practice. “A third of total deal value was related to shale plays in the first three months of the year, indicating the ongoing attractiveness of capitalizing on the long-term prospects for shale gas.”

After massive midstream shale deals in 2013, just two such deals came together in the first-quarter 2014, amounting to $210 million. In the same time frame a year ago, six deals worth $7.7 billion were transacted.

Values drop
Overall, oil and natural gas deals’ total value dipped compared to the fourth-quarter 2013—a typical drop to start a new year—as companies sold small noncore assets.

For the first-quarter 2014, there were 43 oil and natural gas deals with values greater than $50 million totaling $19.8 billion. Compared to first-quarter 2013, values fell $7.7 billion, or 28%, worldwide.

“The first three months of 2014 represented a historic first-quarter across the board led by deal activity in the upstream sector, including in the Gulf of Mexico and interest from foreign players,” said Doug Meier, PwC’s U.S. energy sector deals leader. “Divestures continue to be a major source of deal activity, but we are seeing smaller deals taking place. Larger portfolio adjustments have already been made.”

Smaller deals are also a reality among oilfield services companies, as companies selectively look to add assets to increase productivity and reduce costs.

PwC said that during the first-quarter 2014, five mega-deals worth $10.1 billion were announced, compared to eight mega-deals worth $19.7 billion in the first- quarter 2013.

MLPs were involved in 11 transactions, representing about 27% of total deal activity in the first-quarter 2014, consistent with recent historical levels.