AUSTIN, Texas, April 8, 2021 / PRNewswire / – Enverus, the SaaS leader in energy, released its summary of upstream M&A activity in the United States in 1Q21. The report shows $ 3.4 billion the value of the deal has closed – an 88% drop from 4Q20. This is the third year in a row that US activity has started slowly.
First quarter trading activity was largely focused on high producing assets in former oilfields. Together, the Ford Bakken and Eagle accounted for two-thirds of the deal’s value. A strong recovery in crude oil prices, improving cash flow in these more developed regions, likely helped spur additional buyer interest.
Another distinguishing factor of the first quarter activity is the involvement of private equity. The two biggest deals of the quarter were acquisitions by private equity sponsored E&P: Grayson Mill Energy’s $ 900 million buy in Bakken and Validus Energy $ 880 million Eagle Ford purchase. The next two most significant deals were the sales of Bruin E&P (formerly private equity-backed, then owned by creditors following a bankruptcy reorganization) and Grenadier Energy Partners II, sponsored by EnCap and Kayne anderson. Then, the first day of the second quarter opened with a sale of DoublePoint Energy, which specializes in Permian, which has at least four private sponsors, to Pioneer as part of the largest private E&P acquisition in a decade.
“After most of 2020’s business has been dominated by mergers between state-owned companies, we see private equity playing a bigger role in M&A markets in 2021,” said Andrew Dittmar, M&A Analyst at Enverus. “After years of massive investment in unconventional resources, private E&P were struggling to find exits through sales or IPOs and had consequently reduced their spending on new transactions. December 2020 and continuing through 2021, we have seen several significant releases as well as new investment from the private side of the industry. “
“Going forward, private equity is expected to continue to play an important role in upstream mergers and acquisitions, both on the acquisition side, targeting legacy areas that are sold as state-owned companies narrow their focus and as potential targets for SOEs to buy using their now more expensive stocks. like paying like Pioneer did to buy DoublePoint, ”Dittmar added. “The consolidation of additional private companies will also help address concerns that a ramp-up of platforms on the private side could once again send crude markets into oversupplied territory. Pioneer has already announced plans to downsize all seven platforms. DoublePoint forms to five by the end of the year. “
Through its SaaS platform, Enverus is the leading data, software and information company providing innovative technologies and predictive / prescriptive analytics, enabling customers to navigate the future. Enverus solutions bring value to more than 6,000 customers in 50 countries in the upstream, midstream and downstream sectors, enabling the industry to be more collaborative, efficient and competitive. Enverus is a portfolio company of Genstar Capital. Together creating the future of energy. Learn more at www.enverus.com.