PERTH (miningweekly.com) – Australia is expected to headline merger and acquisition (M&A) activities in the liquefied natural gas (LNG) sector in 2021, advisory firm Wood Mackenzie (WoodMac) has predicted.
WoodMac Asia Pacific vice chairperson Gavin Thompson noted that M&A activity is expected to resume over the next 12 months, and that the recovery in oil and gas prices should bring buyers and sellers closer on price expectations, while ongoing consolidation among upstream producers in North America has driven a sharp uptick in global M&A in recent months, likely pushing more non-core Asia-Pacific assets into the market.
“This is raising hopes that long-anticipated deals in Australia, Malaysia, Vietnam and elsewhere could finally get done. Much will need to go right, but by the end of next year, Asia Pacific could well see signs of a refreshed corporate landscape and companies looking again to growth. Sounds great, but of course challenges remain,” Thompson said.
WoodMac has identified 11 high-profile prospective Asia-Pacific deals on its M&A watchlist, including assets both formally on the market and others rumoured to be for sale or farm-down.
Combined, these account for almost $12-billion of value, Thompson said.
“And it doesn’t stop there. A further $26-billion of assets are now in their ‘speculative’ deal bucket as portfolio streamlining and balance sheet deleveraging mean that fresh opportunities are coming onto the market at a steady pace. For the majors in particular, the longer-term impact of the energy transition is driving further non-core divestments as strategies quickly evolve,” he added.
He noted it would be majors and larger international oil companies that were most likely to be the primary sellers in 2021.
“When looking at the $12-billion of potential divestments by asset type, LNG opportunities account for more than half of the 5.8-billion barrels of oil equivalent of resources on offer. About a third of this is associated with producing assets, with 2.7-billion barrels of oil equivalent located in Australia,” said Thompson.