Offshore staff
LONDON – This year looks set to be the least eventful since the turn of the century for upstream transactions in the Asia/Pacific region, according to Wood Mackenzie.
The consultant’s analysis reveals that as of mid-November, $426 million of assets in the region have changed hands this year, more than 90% down on the $5.1 billion of transactions in 2019.
In part, this is line with the global upstream M&A trend, with commodity prices falling and operators focused on resilience and long-term strategic planning.
Wood Mackenzie principal analyst Alay Patel said: “Never before has the upstream industry been challenged to this extent. The combination of the oil price crash, COVID-19 and rising pressure to comply with ESG standards have created the perfect storm in the upstream industry.
“This means we can expect deal activity to bounce back over the next 12 months as buyer-seller price expectations converge, and the recent uptick in global M&A driven by consolidation of North American players spills over to divestment of non-core Asia/Pacific assets.”
There could be around $12 billion of Asia/Pacific upstream assets up either for sale or for farm-down, driven by portfolio rationalization and decarbonization pressures in readiness for the energy transition.
Majors and large IOCs will likely be the main sellers, with more than half of the assets on sale in Australia and New Zealand. LNG opportunities account for almost 60% of the 5.8 Bboe on offer, the consultant claimed.
Research director Andrew Harwood said: “If we look further ahead towards potential farm downs or future candidates for divestment, we assess a further $26 billion of assets could come to the market as corporate strategies evolve.”
Asian NOCs, regional specialists and infrastructure funds could be among the key bidders, likewise private equity backed-buyers seeking to adapt their strategies to the new upstream outlook.
11/19/2020
