InSight

Exit and Growth Strategies for Middle Market Businesses

Energy Sector Q1 M&A News

By Roy Graham | Mar 08, 2017

energy sectorM&A activity for North American based target companies in the Energy sector for Q4 2016 included 118 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $271 million.

With oil prices making a slow recovery, US oil production activity is becoming increasingly concentrated in the Permian Basin. Spanning parts of western Texas and southeastern New Mexico, the Permian Basin’s highly productive fields and substantial transportation infrastructure make it one of the few places for profitable oil production when prices are relatively low. (US oil prices, which were over $100 per barrel as recently as August 2014, dropped below $30 per barrel in early 2016 and averaged $45 per barrel in the first week of November 2016.) The Permian now holds nearly as many active oil rigs as the rest of the US combined.

Industry Indicators

  • Total US revenue for electric power generation, transmission and distribution rose 2.10% in the third quarter of 2016 compared to the previous year.
  • The average US retail price for diesel and regular gas, which influences profitability for oil and gas companies, rose 24% and 25.3%, respectively in the week ending January 23, 2017, compared to the same week in 2016.
  • The spot price of crude oil, which affects profitability for oil and natural gas operations, rose 50.3% in the week ending January 13, 2017, compared to the same week in 2016.

Posted by Roy Graham.

Read the Entire Energy M&A 1st Quarter Newsletter Here


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