Rocky Mountain oil reserves generate $9.5B in deals

Interest in Rocky Mountain area oil reserves last year fueled 18 mergers and acquisitions transactions in the energy industry valued at $9.5 billion, according to PricewaterhouseCoopers.

Two Rocky Mountain deals amounted to $5.4 billion during the fourth quarter, according to an analysis by the consulting company.

“With Colorado’s geographical convenience and proximity to booming oil and gas markets, companies will remain drawn to this region in 2012 – making it a key contributor to the growth in the Energy sector of the U.S. economy,” Rowena Cipriano-Reyes, a Denver-based partner with PwC’s energy practice, said in a statement.

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While Houston maintains a strong presence as a hub for oil and gas companies, Denver could re-emerge as a key player in the oil and gas market, Cipriano-Reyes said in a phone interview.

Advancement in hydraulic fracturing technology and attractive commodity prices will keep deal flow active in 2012, she said.

“We hope that the infrastructure to support the demand will follow suit, as well,” she said. “Certainly that’s a key driver in terms of distributing that to… consumers.”

The energy sector shifted its focus to oil and liquid plays as natural gas prices remained depressed, hitting a 10-year low last year, according to PwC.

In 2011, there were 191 mergers and acquisitions deals for a total of $186.5 billion in activity. By comparison, deal value amounted to $138.5 billion in 2010.

Partly driving the increase in activity, shale plays accounted for 68 transactions with a $107 billion value last year. In 2010, 85 shale deals were valued at nearly $69 billion.

Average deal size in 2011 jumped to $977 million from $706 million in 2010. More than 30 deals had values of $1 billion or more.

“M&A activity in the U.S. oil and gas sector was extremely active in 2011 as shale plays continued to attract the large multinational energy companies, foreign buyers and private equity firms,” Rick Roberge, principal in PwC’s energy M&A practice, said in the statement. “New drilling techniques in hydraulic fracturing are uncovering vast amounts of crude oil and natural gas.”