NEW YORK, July 18, 2016 /PRNewswire/ --
Current oil prices have substantially recovered as compared to
its $25-$30 lower levels in first
quarter of this year, to the current levels of $45-$50 by the 2nd quarter. The
increase in price per barrel has given a boost to the straggling
companies in the oil and gas sector. As a result, total global
spend on upstream M&A deals rose significantly, as companies
started to take advantage of the revival in the sector.
International Western Petroleum, Inc. (OTCQB:
INWP), Range Resources Corp. (NYSE: RRC),
Chevron Corporation (NYSE: CVX), Exxon Mobil
Corporation (NYSE: XOM), Marathon Oil
Corporation (NYSE: MRO)
The oil and gas industry is divided into three major
sectors: upstream, midstream and downstream.
The upstream oil sector is also commonly known as the
exploration and production (E&P) sector. According to data
provided by the Oil & Gas Financial Journal, Q2 upstream deals
were worth a combined $25.6 billion,
up from $18.5 billion in Q1, an
encouraging 38% increase.
Smaller companies have been more active in domestic
acquisitions. International Western Petroleum, Inc. (OTC:
INWP) just announced that it has executed a definitive
Purchase and Sale Agreement to purchase all assets of a privately
held Houston-based exploration and production company in the
Texas Gulf Coast region. International Western Petroleum, Inc. will
also assume the Seller's position in its acquisition targets of
some 55,000 acres and 258 wells (59 active) with current production
of 400 bopd and 8700 mcfpd gas. The second phase of acquisitions,
which is scheduled for September 30,
2016, will provide a total of $17.2
million of which $8.5 million
will be spent in acquisition cost and $8.7
million will be spent in development cost. The last phase of
acquisitions, which is scheduled for November 30, 2016, will provide a total
$26 million of which $20 million will be spent in acquisition cost and
$6 million will be spent in
development cost.
International Western Petroleum, Inc. continued on stating that,
"proven reserves of the combined entity upon acquisition is
estimated by reputable third party engineering firms DeGolyer
McNaughton, Ralph E Davis & Associates, American Energy
Advisors and Netherland Sewell &
Associates at 5.615 million bo proved and 111.8 BCF gas or
$129 million PV10% and $201 million undiscounted."
Earlier in May, Range Resources Corp. (NYSE: RRC) said it
agreed to buy competitor company Memorial Resource Development
Corp. in an all-stock deal valued about $3.3
billion. Shares of Range Resources Corp. have increased 75%
year to date.
Larger companies, on the other hand, have been focusing on
development of projects overseas, investing large amounts of money
in them. Chevron Corporation (NYSE: CVX) for example,
announced recently a $36.8 billion expansion of the Tengiz oil
project in Kazakhstan. Shares of
Chevron increased in value by 19% since the beginning of the
year.
Exxon Mobil Corporation (NYSE: XOM), is partnering with
Qatar Petroleum acquiring energy assets in Mozambique, which currently has some of the
biggest natural-gas discoveries in a generation. Naturally foreign
companies and investors are attracted. In addition, on July13th it
was reported that ExxonMobil offered to buy InterOil Corp. topping
the previous bid $2.2 billion. Shares
of Exxon surged 22% year to date.
Marathon Oil Corporation (NYSE: MRO) also
recently announced of an important acquisition. The company will
acquire PayRock Energy Holdings LLC for $888
million. The acquisition adds to Marathon's portfolio of
properties in the Oklahoma area.
Shares of Marathon are up 20% year to date.
To witness the recovery of the US upstream sector, and the data
on global spend on upstream M&A is an encouraging sign to
investors. It is very active virtually across the whole board and
with players on both the buy and sell sides.
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