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Oil, gas deal tracker: COVID-19 fallout stifled Q3'20 M&A

The pace of oil and gas M&A deal-making in the third quarter of 2020 remained well below year-ago levels as the industry reckoned with COVID-19's negative impacts on consumer demand and company balance sheets, according to S&P Global Market Intelligence data.

The sector announced 25 fewer whole-company and minority-stake deals than in the third quarter of 2019 — 88 deals compared to 113. In the same period, the combined value of deals rose by just over $100 million to $27.14 billion. The number of announced asset transactions, meanwhile, fell from 134 to 100 and their aggregate value declined $1.09 billion to $14.54 billion.

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The quarter saw five billion-dollar-plus transactions, with Chevron Corp. and Noble Energy Inc.'s $13.76 billion combination topping the list of biggest whole-company and minority-stake deals in 2020 so far and Berkshire Hathaway Energy's $9.75 billion purchase of Dominion Energy Inc.'s gas transmission and storage assets taking the first spot among asset-level deals.

During the period, Devon Energy Corp. also announced a $5.79 billion acquisition of fellow independent driller WPX Energy Inc. and The Blackstone Group Inc. sold its roughly 40% stake in Cheniere Energy Partners LP to Brookfield Infrastructure Partners LP for $3.48 billion.

Smaller transactions included Southwestern Energy Co.'s $893.5 million purchase of Marcellus and Utica Shale driller Montage Resources Corp. and gas liquids producer Painted Pony Energy Ltd.'s $377.3 million merger with Canadian Natural Resources Ltd. In September, Schlumberger Ltd. agreed to merge its integrated completions services business with Liberty Oilfield Services Inc.'s fracturing and engineering operations for $427.8 million.

According to 55% of oil and gas firms polled for the Kansas City Federal Reserve's third-quarter Energy Survey, constrained profitability will drive a massive increase in mergers and acquisitions through 2021.

Momentum from upstream combinations is not expected to trickle down to the pipeline sector, however. Replicating that activity farther downstream presents "a lot more headwinds than tailwinds," according to Raymond James & Associates Inc.'s Justin Jenkins.

"We'd love to see some of the larger well-capitalized strategics or private equity do more bidding in the space to get a better sense of things, but it's more of a wish or a hope than a reality," he said in a recent interview.

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