According to the ‘Bi-annual Downstream Deals Review – H2 2017’ report from data analytics company, GlobalData, $21.1 billion in mergers and acquisitions (M&As) were announced in the downstream sector in 2H17.
The report states that this value was a decrease of 19% from the $26.2 billion in M&A deals announced in 1H17. A year-on-year comparison shows a substantial decline of 75% in deal value in 2H17, when compared to 2H16’s value of $84.9 billion. There were 11 M&A deals with values of greater than $100 million, together accounting for $20.5 billion in 2H17.
Glencore’s agreement to acquire a 75% stake in Chevron South Africa and a 100% stake in Chevron Botswana, for a cash consideration of $973 million, was one of the top deals registered in 2H17. The assets of Chevron South Africa and Chevron Botswana include Cape Town refinery, which has a refining capacity of 110 000 bpd; a lubricants manufacturing plant in Durban; a network of more than 820 Caltex branded service stations (with 220 convenience stores) across South Africa and Botswana; and storage tanks and oil depot distribution facilities.
Financing through equity offerings, debt offerings, private equity, and venture financing in the downstream oil and gas industry totalled $73.9 billion from 87 deals in 2H17. The majority of the investment came from the debt offerings market, which accounted for 90% of the total, at $66.5 billion, in 2H17. On a year-on-year basis, the total value of announced capital raising deals increased significantly by 42% in H2 2017, compared with $52 billion in 2H16.