Acquisition Advisors | Oil Boom Sparks Merger Activity
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13 Feb Oil Boom Sparks Merger Activity

BY ROD WALTON World Staff Writer
Wednesday, February 13, 2013
Tulsa World

The boom in unconventional oil and gas sparked high-level merger and acquisition activity across the nation last year, according to a Deloitte report released Monday.

Tulsa’s own energy sector was no less active in 2012, with at least 15 major deals reported. Williams Partners LP, Unit Corp., NGL Energy Partners, Apache Corp, Caballo Energy LLC and others bought or sold in multimillion-dollar and even billion-dollar transactions.

“Deal activity was healthy across the board,” said David Perkins, managing director of Tulsa-based Acquisition Advisors, which helped complete five local transactions in the oil and gas sector.

“I don’t know if it was driven more than any other sector, but when it’s hot it’s very hot,” he said. “This is how the economic cycle can be healthy for companies which survive.”

Deloitte’s annual mergers and acquisitions report, which includes deals worldwide worth $10 million or more, said the value of oil and gas transactions topped $321.5 billion in 2012, up 7 percent from the previous year. Buyouts of North American assets rose about 50 percent.

“The unconventional trend has had ripple effects throughout the industry value chain,” Trevear Thomas, principal at Deloitte Consulting LLP, said in the report. “First E&P assets, then midstream and even downstream refinery activities have responded to the shale and tight oil boom in North America.”

The biggest Tulsa-related M&A action was Apache Corp.’s $2.85 billion buyout of Cordillera Energy Partners III LLC’s 254,000 net acres in the Anadarko Basin. Apache is based in Houston, but the Cordillera deal helps expand its Tulsa office by dozens of employees.

The most recent major acquisition was Tulsa-based Williams Cos. Inc. taking a $2.16 billion stake in Oklahoma City-based Access Midstream Partners LP. The deal closed last month.

Aside from Williams’ acquisitions, the Tulsa energy deals were mostly concentrated in the exploration and production, or upstream, segment of the industry. Petrohawk founder Floyd Wilson’s $550 million takeover of RAM Energy Resources Inc was one, while other, smaller deals involved Eagle Energy LLC, Unit Corp., WPX Energy and Ring Energy.

Perkins said such deals would not have happened four years ago when commodity prices and credit markets were in a state of collapse. The rebound in crude oil prices, along with low interest rates and higher profits, has pushed buyers and sellers closer together.

“Buyers, they’re ready to buy,” Perkins said. “Those sellers, they know times are better. They’re proud again of what their business looks like. So they’re saying, ‘Hmm, if I want to sell now, this is a good time.’ ”

The M&A frenzy could continue in 2013 and beyond. Perkins believes the industry is in the early stages of a buy-and-sell cycle that should last another three or four years.

And Tulsa has plenty of startup builders out there. Steve Antry has developed two companies, Beta and Eagle, selling the latter one to Midstates Petroleum last year. Meanwhile, a group of former Samson Investment Co. employees has started Bright Horizon Resources with an eye toward selling several years from now for the benefit of its private equity investors.

“I think it’ll be good or better,” Perkins said. “As long as there’s not some big scare, I think it’s going to keep rolling.”

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