US oil and gas property sales during the third quarter of 1999 reached $1.2 billion, bringing the total for the first 9 months to $44.4 billion in 202 transactions, according to Randall & Dewey Inc., Houston. This was among the conclusions of the firm's quarterly review of selected worldwide merger, acquisition, and divestment (MA&D) activity, based on deals announced during the first three quarters of 1999.
The reduction in the number of announced transactions was "sizeable" when weighed against those disclosed during the second quarter, says Randall & Dewey, "notably due to the lack of megamerger announcements."
Randall & Dewey also noted a decline in the number of deals worth more than $100 million. Only two such deals were announced, which is the lowest the firm has recorded in recent memory, it said.
"Looking back at 1997, transactions below $100 million accounted for 17% of announced volume. As megamergers fueled transaction volume growth in 1998, transactions below $100 million fell to 5% of the total volume, compared to 4.5% for the first 9 months of 1999," said Randall & Dewey.
Of the 202 deals recorded for the first 9 months of 1999, the 48 largest transactions, totaling $28.9 billion, reported reserve figures of 3.59 billion boe. Randall & Dewey calculated the average acquisition cost for these deals at $8.05/boe, vs. $8.87/boe for those transactions announced in the first quarter.
Randall & Dewey continued, "The trend toward larger transactions slowed considerably in the third quarter with only two announced transactions in excess of $100 million, bringing the total number for the [first] 9 months [of 1999] to 13. The total volume of such transactions was $42.1 billion, or 95% of the announced 9-month transaction volume."
When breaking the transactions down into buyer and seller categories, not much has changed since Randall & Dewey's analysis for the first half of 1999 (OGJ, Oct. 11, 1999, p. 34). "The acquisition announcement of ARCO by BP Amoco [PLC] dominated both the foreign segment in the buyer category, [at] 53% [of the total], and the integrated segment in the seller category, [also at] 53%," Randall & Dewey said.
The firm concluded: "It will not be surprising to see the independent segment accounting for a larger part of the future transaction volume when asset-based transactions begin to increase. With the prevailing consensus that the merger boom has peaked, and the rationalization of megamerger assets having barely begun, the MA&D industry appears poised for record asset activity well past [the year 2000]."
