62 / 72
5 8
E
C ONOM IC R
E
P OR
T
2
0
1
7
ϲ͘ϱ Dergers and AcƋuisitions
H ist or
y w ould sugge st t
h at an indust
r
y dow nt ur n is t
r adit ionally follow
e d b
y a p
e
r iod of aggr
e ssiv
e acq uisit ion
actiǀity, ǁith ďuyers looŬing to acƋuire cashͲstraƉƉed sellers͘ ,oǁeǀer, there ǁere limited edžamƉles oĨ this oǀer
the last three years, ǁith only Ψϴ ďillion ǁorth oĨ UK traded ǀalue in D&A deals ;this edžcludes multiͲnational
corƉorate deals such as the merger oĨ ^hell and G GrouƉ ǁhich comƉleted in early 201ϲͿ͘
Figure 32: Total UKCS Upstream M&A Activity
0
1
2
3
4
5
6
7
2 014
2 015
2 016
2 017 ( To D ate)
)noilli B $
( eula V noitisiuqcA dna regreM lanimo N latoT
Source: Wood Mackenzie, Oil & Gas UK
,oǁeǀer, the asset and corƉorate trading marŬet has ďecome more liƋuid in 2017͘ There haǀe ďeen many high
p
r ofile up st
r
e am acq uisit ions announce d ov
e
r t
h
e fir st h alf of t
h is y
e ar w it
h an e st im at
e d UK t
r ade d v alue of ne ar ly
Ψϲ ďillion comďined͘ The rationale ďehind the actiǀity has ǀaried, ďut Ĩeǁ deals ǁould Ĩall under the category oĨ
Ĩinancial distress͘ Dore commonly, the transactions are driǀen ďy diǀerse tyƉes oĨ inǀestors, most notaďly Ɖriǀate
eƋuityͲďacŬed comƉanies, looŬing to enter the marŬet at ǁhat they consider to ďe an oƉtimal time͘ On the seller͛s
side, there has ďeen a midžture oĨ smaller comƉanies looŬing to leaǀe the ďasin and Ĩocus on oǀerseas oƉƉortunities
and maũors ǁhose incentiǀe to sell is driǀen ďy ƉortĨolio rationalisation and consolidation͘ It is imƉortant to note
that the maũors do remain committed to the UK ǁith a Ĩocus on their largerͲscale assets, tyƉically Ĩound ǁest oĨ
Sh
e
t land. A n incr
e asing p
e
r ce nt age of p
r oduct ion int
e
r
e st is like ly t o cont inue b
e ing sold t o sm alle
r com
p anie s
w it
h a div
e
r se m ix of funding.