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The Three Largest Oil & Gas Deals: 2011 – 2012 YTD

by Kevin Smith

  • 08 Mar 2012
  • PE

The oil and gas industry has become a popular sector recently amongst private equity firms looking to deploy their capital. Between January and February this year there were 22 buyout deals in the oil and gas sector, a 57% increase over the same period in 2011. Year to date, the industry has already attracted $10.95bn in private equity investment from some big named players such as Apollo Global Management, Blackstone Group, KKR, and TPG. For the entire 2011 period the oil and gas industry harvested $18.1bn in investment.

When drilling down by region, the North American oil and gas sector clearly sees the most deal activity accounting for 72% of the total number of buyout deals announced and completed between 2011 and 2012 YTD (as at 08/03/2012). Europe and Asia & ROW account for 16% and 12% of deal volume, respectively.

In terms of the proportional breakdown of aggregate capital invested in the sector between the same period, North America accounts for 92% of the total amount ($29bn) invested globally, with Europe and Asia & ROW making up the remaining 5%, and 3%, respectively.

The three largest and most notable oil and gas deals made between 2011 and 2012 YTD are:

#1 Samson Investment Company. KKR and other investors including ITOCHU Corporation, Crestview Partners, and NGP Energy Capital Management entered into an agreement to acquire Samson in November 2011 for $7.2bn. KKR is taking a 60% stake in the company. The deal is less leveraged than a typical leverage buyout (LBO) deal, with $4.2bn provided in equity to support the transaction.

#2 El Paso Corporation’s Oil And Natural Gas Exploration And Production Assets. In January 2012, a consortium of investors led by Apollo Global Management, signed a definitive agreement to acquire El Paso Corp's oil and gas exploration and production business for approximately $7.15bn. Riverstone Holdings is also participating in the transaction along with Access Industries. The transaction is subject to the closing of the merger between Kinder Morgan, Inc. and El Paso Corporation and other customary closing conditions.

#3 Frac Tech Holdings. In April 2011, RRJ Management, Temasek Holdings, CPP Investment Board, and Chesapeake Energy Corporation acquired a 70% stake in Frac Tech Holdings for $3.5bn. Bank of America and Citigroup provided $1.7bn in debt financing to support the transaction.

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