By OGJ editors
HOUSTON, Mar. 24 -- Worldwide oil and natural gas property sales hit $40.7 billion in 2002, with the US market accounting for $10 billion, according to a review of merger, acquisition, and divestment (MA&D) transactions by Randall & Dewey Inc. of Houston.
The world total of 361 announced deals during 2002 included $9.4 billion, or 23%, in Canadian reserves and $21.3 billion, or 52%, in transactions outside the US and Canada, Randall & Dewey's transaction database showed.
"Looking forward, the expectations for continued commodity price volatility may dampen the MA&D market, although expectations of greater deal volume than seen last year abound. History indicated that extreme price volatility—short-term swings on both the upside and the downside—will negatively impact both buyers and sells as they weigh transaction decisions," said Randall & Dewey.
In the US market, MA&D upstream transactions in the fourth quarter of 2002 totaled $3.2 billion involving 37 deals, raising the total transaction volume for the year to $10 billion involving 168 announced transactions.
Acquisition costs
"The increase in fourth quarter MA&D activity (for the US) pushed the implied reserve value for the quarter to $6.90/boe, bringing the implied reserve value average for the year to $6.14/boe. Without the stronger fourth quarter, 2002 was the first year since 1996 that the average reserve value for US transactions would have been below $6/boe," Randall & Dewey said.
A divergence remains between implied transaction values, stronger commodity prices, and a sharp increase in reported finding costs for 2002, the firm noted.
In Canada, the average implied reserve value climbed to $7.12/boe for the fourth quarter compared with $5.16/boe for the first 9 months and $5.27/boe for 2002.
For transactions outside the US and Canada, Randall & Dewey reported the implied average reserve value dropped to $1.18/boe for the quarter, averaging $2.85/boe for the year.
"This trend is down sharply from $3.64/boe and $4.07/boe in the first and second quarters, respectively, as a sluggish global business environment and global geopolitical uncertainties negatively impacted investment decisions," Randall & Dewey said.
In the fourth quarter, Randall & Dewey reported nine US transactions greater than $100 million with proved reserves total $2.4 billion for an implied reserve average value of $7.11/boe and a median value of $6.19/boe. That compared with 12 non-US announcements greater than $100 million in size totaling $5.2 billion with an average implied reserve value of $1.98/boe.
Activity by US market segment
Independent companies dominated the US transaction activity, accounting for 67% of buyer activity and 64% of seller activity for the year.
Buyers from outside the US were the second biggest buyers, accounting for 13% of the US market activity. The transportation-downstream segment was the second most active seller, accounting for 25% of that activity in the US market.
