Utica Shale Deals Increasing, Marcellus Deals Decreasing

A new report from PricewaterhouseCoopers analyzing American energy mergers and transactions in 2011 worth more than $50 million found a dramatic increase in deals in the Utica Shale, and a dramatic decrease in deals in the Marcellus Shale.

Seven deals involving the Ohio oil and gas formation totaled $6.7 billion in 2011 — a huge increase from the single transaction worth $178 million in 2010.

Thirteen deals in 2011 involved the Marcellus Shale that underlies much of Appalachia and is known for so-called drier deposits of natural gas. They accounted for $9.9 billion in transactions, a fall from the 22 deals that totaled $20.3 billion in 2010.*

No doubt the shift from dry gas (methane only) to wet gas (liquids-rich areas) had a lot to do with the ramp up in the Utica and decline in deals for the Marcellus. But don’t forget that the Marcellus has been white hot for a number of years now, and a lot of big deals, representing a lot of acreage, have already happened. That is, so many deals have already been done in the Marcellus, there’s not much left to do!

A few other interesting factoids from the PricewaterhouseCoopers report:

  • Oil and gas activity in the United States in 2011 jumped nearly $50 billion, with 191 deals accounting for $186.5 billion spent.
  • In 2011, the number of deals fell but the average value of each rose. The average deal size in 2011 was $977 million, up 38 percent from the previous year.
  • In 2011, foreign buyers completed 40 transactions worth $56.4 billion. That’s five fewer than in 2010, but a 55 percent increase in deal value.*

*Pittsburgh Post-Gazette (Feb 8, 2012) – Utica Shale deals leapt to $6.7 billion in ’11