TOP 10 TAKEAWAYS
1. U.S. upstream activity slowed to $8.7 billion versus $22.0 billion in Q1 and $17.8 billion quarterly average since 2009.
2. Middle market ($100 million to $1 billion) pace of transactions steady in Q2.
3. During Q2 pause, the previously white hot Permian market stalled at just $801 million in deals, the lowest quarter since $437 million in 2Q15.
4. Regarding the Permian, rapid production growth has reached near full pipeline capacity takeaway for both oil and gas with implications for the M&A market.
5. For perspective, from 2Q15 to 2Q18, the Permian chalked up $71.1 billion in deals or 35% of the $200 billion U.S. Upstream oil and gas transaction market.
6. Largest U.S. segment in Q2 is conventional resources (trading at a production or cash flow multiple) followed by Utica. 7. Trailing U.S. average production multiple now stands at $45,000 per daily bbl, $2,250 per daily Mcf and $20,000 per daily bbl NGL.
8. U.S. market for royalties and minerals very strong as this segment rapidly evolves and attracts public market exposure.
9. 2Q 2018 slowdown due to lack of public company buying driven by Wall Street mandate for cash flow over growth. Also uncertainty reigned regarding oil price pending June OPEC meeting.
10. Bankruptcy wave not over with Rex Energy being latest large official casualty. 11. Globally, $20.2 billion in upstream deals, down 50% from Q1’s $40.4 billion. 12. Canada sees $6.6 billion in upstream deals, up four-fold from Q1’s $1.5 billion. 13. Total energy transactions across value chain reach $165 billion globally, led by very strong Midstream and Downstream sectors.
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