Deals in the energy sector will skyrocket over the next 12 months, as domestic oil projects, unfettered by regulatory restrictions, are expected to expand, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP). The MMP is a forward-looking sentiment indicator, published in partnership with CT, a provider of business compliance and deal support services. The MMP is based on a monthly survey of approximately 250 middle maker M&A professionals. (Read the full report).
Survey participants gave the energy sector a composite score of 86.0 for the 3-month outlook and a score of 90.3 for the 12-month outlook, among the highest MMP scores delivered by any sector ever. Dealmakers expect activity in the energy sector to benefit from President Donald Trump’s pledge to boost the U.S. fossil fuel industry by opening more areas to drillers. On Feb. 1, the Senate approved Rex Tillerson, the former CEO of ExxonMobil Corp. (NYSE: XOM), as the next Secretary of State.
One notable deal announced in January was the acquisition of Clayton Williams Energy Inc., for $2.7 billion in stock and cash, by Noble Energy Inc. (NYSE: NBL). The combination will create the second-largest acreage position in the Southern Delaware Basin of the Permian shale formation, Houston-based Noble said in a statement. The deal provides more than 4,200 drilling locations on about 120,000 net acres, with resources of more than 2 billion barrels of oil equivalent.
Although lower than the energy scores, the overall M&A scores of 78.0 for the 3-month outlook and 79.7 for the 12-month forecast were the highest since mid-2015, reflecting respondents’ optimism about dealmaking in 2017. Nearly 70 percent of survey participants said they expect the outcome of the U.S. election to result in more middle-market M&A.