“It’s been a schizophrenic year,” says Scott Richardson, co-founding principal of Houston-based A&D advisory firm RBC Richardson Barr, evaluating the E&P transaction marketplace in 2011.

In a year of contrasts, long periods have passed when no asset sales have gotten done, followed by a big deal that trades at the top of the market.

“The cycles are moving at warp speed. The market can change in literally weeks.”

Richardson presented his observations and market analysis to industry players at an IPAA meeting in Houston.

Contrast the current waning year with 2010, a record year for A&D activity following a stifled 2009 during the financial crisis.

“I don’t think we will ever see a 2010 again. Everybody was selling. Public companies were selling dry gas, private-equity companies sold oil acreage positions in resource plays, and pure private companies sold because they knew we would never have 15% capital gains again. You almost had more selling in 2010 than buyers.”

But 2011 is “a real head fake,” Richardson said. “It’s been a quiet year.”

Although the year thus far has seen some $40 billion in deal volume, nine acquisitions account for 52% of the total. “If you peel back those big deals, there hasn’t been the bread-and-butter $100- to $500-million business that we’ve historically had.”

Last year saw more than 100 deals in that range with production and cash flow.

Why has the market been so quiet? Richardson sees three primary reasons:

First, the joint-venture (JV) market has been so frothy and liquid that many companies that historically would have sold conventional oil or gas have been fortunate to team up with international JV partners. “It’s deferred the historic asset-sale activity.”

Second, capital markets have been mostly liquid. “We’re in a very low interest-rate environment, and a lot of the private equity that has historically sold in the asset market is now looking to the capital markets.” These vehicles to monetize include master limited partnerships (MLPs), C-Corps through IPOs, drilling trusts and Canadian mutual funds.

And last, dry-gas prices have dried up dry-gas deals. “Right now there is so much demand (for dry gas). Buyers want to buy dry gas, but at sub-$4, you’re getting full valuation for your PDP (proved developed producing) assets, but not much beyond that.”

As a result, private-equity-backed companies might prefer to IPO through the capital markets as opposed to sell through the asset market. Ten E&P IPOs are currently on file now, including Laredo Petroleum, Dynamic Offshore Resources, Lime Rock Resources, Enduro Resource Partners and Chesapeake Granite Wash Trust. Richardson anticipates another five to seven more filing S-1 documents in first-quarter 2012.

If these private companies are successful going public, “there will be an arbitrage in the A&D market.”

After a flurry of combinations over the past three years, the JV marketplace is slowing down. Most international buyers of minority interests have already made their maiden acquisitions and are now focusing on bolt-on deals.

“Once you cut your JV deal in the Marcellus, the Utica or the Eagle Ford, there’s not a lot of JV depth beyond that.”

Richardson expects fewer and smaller JVs going forward. And the buyer profile is changing as well. “We’re starting to see JV partners now that are more passive and financially oriented, as opposed to international industry partners.”

On the upside, the corporate M&A market is picking up following four years of drought.

“There is a lot of M&A dialogue going on right now,” he said.

This follows BHP Billiton’s acquisition of Petrohawk Energy, and Statoil ASA’s pending play for Brigham Exploration. Richardson points out that these international buyers entered the U.S. market in recent years via JV or asset purchase. “The asset market has been so quiet that the big guys—to get any asset of size or quality—are having to pivot to the M&A market.”

Oil company valuations are now trading 20% higher than peak times in 2008. “There will be more Brighams,” Richardson predicts. But on the dry-gas side, premiums hover some 20% lower than their 2008 peak. Petrohawk, he said, got beyond that hurdle by simply increasing the premium to match its high point.

More M&A activity is great for the A&D market, “because once there is a corporate M&A transaction, three to six months later there are asset sales.”

Maybe surprisingly, major integrated oil companies and large-cap companies have been the dominant buyers of assets this year. And they’ve become quite nimble in the data rooms, according to Richardson, getting confidentiality agreements signed in one to two days.

“If you are a seller, these guys are important. They are hungry and interested.”

Richardson foresees that activity in 2012 will pick up. JVs will trend down. Capital markets will tighten with continued global volatility. And private-equity companies focused on harvesting assets will move to the sell side soon enough.