Niobrara oil deals surged in 2012

The value of oil and natural-gas mergers and acquisitions in the Niobrara shale formation totaled nearly $4 billion in 2012, according to the accounting firm PricewaterhouseCoopers.

The value of the three Niobrara deals in 2012 more than doubled the $1.4 billion value of the four deals struck in 2011, PwC told the Business Report.

More than $3.6 billion came from two deals that closed in the fourth quarter of 2012. PwC has a policy not to name companies involved in the deals.

One deal includes a combination of assets in the Piceance Basin in northwest Colorado and the Niobrara formation in the Denver-Julesburg Basin.

“If you look at the interest in the Niobrara, it’s really been up for 2012 and continues in the fourth quarter with two significant deals,´ said Rowena Cipriano-Reyes, a Denver-based partner with PwC’s energy practice.

The size of the deals stems from companies’ desire to diversify their assets as well as horizontal oil drilling opportunities, she said. Companies that focus on natural-gas drilling, for example, have sought to enter the Niobrara for shale oil.

Deals in the Niobrara come as Rocky Mountain oil and gas transactions set fourth-quarter and 2012 records. PwC reported 15 deals totaling $9.9 billion in the fourth quarter and 38 deals worth $22.8 billion in 2012.

“Similar to the national trend, those with assets in the Rockies accelerated their deal plans toward the end of the year due to the pending fiscal cliff,” Cipriano-Reyes said. “Looking forward we believe deal activity will continue at similar levels, with the potential of private equity more actively pursuing deals here.”

The most active shale plays for deals with values greater than $50 million during the fourth quarter include the Bakken in North Dakota, which saw seven deals totaling $4.1 billion.

Nationwide, oil and gas merger and acquisition activity during the fourth quarter of 2012 came to 75 deals totaling $56.2 billion, the second-highest level seen in a decade.

The flurry of fourth-quarter activity pushed overall deal volume in 2012 to 204 transactions for deals valued at over $50 million. The deals totaled $146.2 billion, also the second-highest total deal value in 10 years.


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