Despite a slower second half, deal activity in the midstream last year was notable for the dollars raised, according to a global oil and gas transactions review of 2014 by tax and transaction advisory group EY.
The midstream was buoyed by several multibillion deals—including the $71 billion Kinder Morgan Inc. (NYSE: KMI) rollup; the $34.4 billion merger of Access Midstream Partners with Williams Partners LP (NYSE: WPZ) and the almost $8 billion deal between Targa Resources Partners LP (NYSE: NGLS) and Atlas Pipeline Partners—and total transaction value increased 115% above 2013.
Volume was another story, however, as the number of deals decreased for each segment except the downstream, EY said. That activity was down 23% in 2014 with only 102 announced deals. Disclosed deal value, however, doubled to more than $150 billion.
Deals in the U.S. and Canada dominated midstream transaction activity, both in volume and value, EY said in its review. All told, the two North American countries accounted for more than 78% of all midstream deals and about 94% of disclosed midstream value worldwide.
Pipelines drove the most action with 46 deals amounting to $17.6 billion, about 40% of the total. Those transactions were rounded out by 30 in diversified deals worth about $131 billion and 17 transactions totaling about $11 billion involving gathering and processing assets.
It was again the unconventional oil and gas boom in the U.S. that racked up attention to infrastructure investment, launching it to an all-time high, EY said.
“We’ve also seen increasing consolidation, spurred on by significant tax advantages for MLP structures,” the analysts said.
Despite Kinder Morgan’s October exit from the MLP structure when it rolled its entities back into a corporation, the structure remains a solid one for midstream investors.
“MLPs offer a wealth of benefits to both sponsor companies and individual investors while providing low-cost, alternative for of capital for expansion and growth,” EY said.
Contact the author, Deon Daugherty, at ddaugherty@hartenergy.com.
Recommended Reading
Petrobras to Step Up Exploration with $7.5B in Capex, CEO Says
2024-03-26 - Petrobras CEO Jean Paul Prates said the company is considering exploration opportunities from the Equatorial margin of South America to West Africa.
Pitts: Heavyweight Battle Brewing Between US Supermajors in South America
2024-04-09 - Exxon Mobil took the first swing in defense of its right of first refusal for Hess' interest in Guyana's Stabroek Block, but Chevron isn't backing down.
Exxon Versus Chevron: The Fight for Hess’ 30% Guyana Interest
2024-03-04 - Chevron's plan to buy Hess Corp. and assume a 30% foothold in Guyana has been complicated by Exxon Mobil and CNOOC's claims that they have the right of first refusal for the interest.
Rystad: More Deepwater Wells to be Drilled in 2024
2024-02-29 - Upstream majors dive into deeper and frontier waters while exploration budgets for 2024 remain flat.
Exxon Mobil Green-lights $12.7B Whiptail Project Offshore Guyana
2024-04-12 - Exxon Mobil’s sixth development in the Stabroek Block will add 250,000 bbl/d capacity when it starts production in 2027.