As featured in Energy Voice, Anderson Anderson & Brown Corporate Finance (“AABcf”) are delighted to share our quarterly Deals+ update for Q3 2020, highlighting selected Energy M&A and Fundraising transactions across the UK.
Reflecting on Q3 2020
From an oil & gas perspective deal activity has remained subdued in Q3 2020 with the COVID-19 pandemic and severe downturn in both Brent and Shale prices still being felt by producers and service providers globally. A resurgence of COVID-19 cases, increased lockdown measures and ‘working from home’ continuing to be the norm has resulted in downward revisions in global oil demand for the rest of the year.
Lower volumes and the demand-sapping lockdown restrictions have had a crippling effect on asset values with many E&P companies taking significant impairment charges over the quarter with some abandoning fields all together. Despite prices stabilising between $40 - $45 p.b many are still hurting with a wave of large US corporate bankruptcies announced over the quarter.
From an M&A perspective activity remains challenging despite much greater discussion across the market of a new wave of consolidation. Stand-out deals in the quarter include Viaro Energy's £247m acquisition of RockRose Energy and Swire Oilfield Services acquisition of Norwegian helicopter refuelling specialist Helifuel.
Despite already bearing sub-zero prices, a Saudi-Russian price war and a shock to global oil demand we expect oil plays to continue to remain challenging into Q4 2020 with the outcome of the upcoming US presidential election and OPEC+ meetings being further key hurdles to overcome before any economic recovery can begin. However, we do anticipate that M&A activity will start to pick up as we see more consolidation in the oil & gas market, as we saw with the Chrysaor – Premier Oil merger announced last week.