Energy M&A deals off to fast start

Deal-making in the U.S. energy sector reached an eight-year high in the first half of 2017, buoyed by a surge of mergers and acquisitions in the first three months of the year, according to a report.

Mergers and acquisitions in the U.S. from January through June were valued at $110 billion, more than double the $54 billion in the first six months of 2016, according to the report from the accounting and consulting firm PricewaterhouseCoopers. It was the best start to the year since 2009.

“The first half of 2017 set a record for oil and gas M&A despite oil prices declining by 16 percent during the period,” said Doug Meier, PwC’s U.S. oil and gas sector deals leader.

Most of the deals occurred in the first quarter, continuing the momentum from the last half of 2016, when M&A activity totaled $148 billion. Activity slowed in second quarter, but analysts described as a shift from “red hot” to “hot.”

The value of energy mergers and acquisitions fell from $73 billion in the first quarter to $37 billion in the second. Even with the sharp decline, activity in the second quarter was still 42 percent above the same period in 2016, PwC said.

Some of the biggest deals this year came as companies paid top dollar for holdings in the booming Permian Basin in West Texas. Exxon Mobil, Noble Energy, Marathon Petroleum and Parsley Energy of Austin are spending billions in the Permian.

But oil companies also fell out of love with Canadian oil sands. In major deals worth nearly $25 billion combined, Marathon and Royal Dutch Shell sold oil sands holdings to Canadian Natural Resources. That was followed by Houstonbased ConocoPhillips selling its Canadian stake to Calgary-based Cenovus Energy.