Strategics in the oil sector feeling an economic upturn is in sight have been running to
the deal table as valuations are still a bit depressed. In turn, investment banks and law firms alike have responded by hiring as they look to reign in M&A advisory fees.
Some big deals have included:
- Monday's announcement of Encore Acquisition Co. (NYSE:EAC) agreeing to acquire Texas oil and natural gas properties in the Midwest from Exco Resources Inc.; (NYSE:XCO) for $375 million,
- China's Sinopec Group agreeing to buy Addax Petroleum Corp. for about C$9.7 billion ($8.4 billion);
- Heritage Oil Ltd., a British exploration and production company, merging with privately held Genel Enerji AS of Turkey in exchange for shares worth £1.52 billion ($2.4 billion); and
- Asia's largest oil and gas company PetroChina Co. Ltd. (NYSE:PTR) acquiring a 45.5% stake in Singapore Petroleum from Keppel Corp. for 1.47 billion Singapore dollars ($1.02 billion).
The PetroChina deal happened in May, a month where
energy sector deals in general showed heft. And on Wednesday, it was
announced that a BP plc (NYSE:BP) consortium, which includes China National Petroleum Co. as the minority partner, won a fee-based contract to boost production at Iraq's Rumaila oil field.
On Thursday, The Deal Pipeline (subscription required) noted that oil company Repsol YPF-SA says it's received offers for its stake in Argentine YPF after the South China Morning Post said China National Petroleum Corp. was preparing a $17 billion offer for a 75% holding.
I-banks and law firms are well aware of this uptick in oil dealmaking. For instance, Bank of America Merrill Lynch just said it hired Alan Murray for its global corporate and investment banking business as managing director of energy corporate and investment banking, effective late September. Murray was formerly global head of energy M&A at Citigroup Inc. (NYSE:C) and earlier headed Schroders plc's European oil and gas team in London.
Barclays Capital made several appointments to its Latin American equity research team. I've also noticed a significant increase in hires for equities research in the past few months, but that's another post. Among others, BarCap tapped Citigroup's Felipe Mattar and Sergio Conti for utilities and oil coverage.
A big move came early in the month with oil and gas dealmaker Jack
Lentz joining Lazard as chairman, international oil and gas. Lentz was
head of Lehman Brothers Holdings Inc.'s worldwide energy practice. Also from early June:
- RBC Capital Markets Corp. appointed Kurt Hallead and Greg Pardy as co-heads of global energy research to expand that platform to include the integrated oil and international energy services sectors and increase its focus on commodities. Hallead works in Austin, Texas, Pardy in Toronto;
- Société Générale SA brought in Evgeny Solovyov as a senior analyst covering the oil and gas sector. Solovyov previously worked at Merrill Lynch & Co.; and
- Evercore Partners Inc. (NYSE:EVR) hired Robert Pacha for its advisory practice as a senior managing director in charge of its "midstream" practice, which would include oil and gas transportation, processing and storage. Pacha is also setting up an office in Houston for the firm.
Pacha, 40, has been
working in investment banking for 17 years, most recently as managing director at Bank of America Merrill Lynch, where he led the firm's midstream energy and master limited partnership practice. Evercore chairman Roger Altman said in a statement that Pacha's hiring was a "milestone" for the firm.
On the law firm side:
- Morgan, Lewis & Bockius LLP added David Asmus, once head of oil and gas at Baker Botts LLP, to lead the firm's energy transactions practice;
- Jeffrey Nichols joined Haynes and Boone LLP as a partner in the energy and power practice group in Houston, focusing on structured energy transactions for oil and gas, and electric power companies as well as financial institutions. He was with Greenberg Traurig LLP and previously senior counsel with Dynegy Inc. (NYSE:DYN); and
- Baker & McKenzie LLP grabbed seven oil and gas attorneys from Thompson & Knight LLP in Houston: partners Michael Byrd, Louis Davis and Ben Welmaker; of counsel Glen White; and associates David Wildes, Cody Carper and James Sonnier.
There will be more hires and more M&A, and we'll be tracking it. In the near future, it may be worth keeping an eye on Russian oil giant OAO Gazprom's oil arm, which may issue up to $1 billion in bonds to support its
quest for acquisitions. -
Baz Hiralal
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