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

2 thoughts on “Utica Shale Deals Increasing, Marcellus Deals Decreasing

  1. “That is, so many deals have already been done in the Marcellus, there’s not much left to do!”
    ????? I would think that if the DEC ever finishes their work and hydrofracking is allowed in NYS, there would be a lot of drilling left to do in the Marcellus.

  2. You make a good point. My comment was aimed at where drilling is currently allowed, which is PA, WV and OH. It is not currently allowed in NY, MD and a small slice of VA. If those areas open up, you’re absolutely right that more deal making will go on. But if you limit the universe of potential deals to those areas where deals can be done (for now), the point is, much of the land is now consolidated among the larger drillers and there’s not a huge amount left (in the Marcellus region).