Welcome 2024: A Look Back at 2023 Top Oil and Gas Sector Deals

️2023 was quite a year for the oil and gas sector, with some big deals making the news. In the US, giants like ExxonMobil and Chevron grabbed headlines with their plans to acquire companies like Pioneer and Hess. Internationally, ADNOC wasn't left behind, expanding its reach as well. As we ring in the new year, let's recap the biggest oil and gas deals of 2023.

Emerson Electric to buy National Instruments for $8.2 Billion
Emerson Electric Co has agreed to buy National Instruments Corp for $8.2 billion. This deal, which ends Emerson's year-long effort to buy the company, offers $60 per share, a 50% premium over National Instruments' price before their strategic review. After the announcement, National Instruments' stock rose to $57.65, while Emerson's fell slightly.

Emerson, which first offered $48 per share last May, won the bid against Fortive Corp. The deal was chosen over Fortive's similar offer due to lower financing risks and easier regulatory approval. Emerson is using $8 billion from selling its climate technologies unit to Blackstone to fund the purchase.

The acquisition will help Emerson expand in the industrial automation sector, particularly in testing, measurement, and software-connected systems. The deal, part of Emerson's strategy to grow in areas like semiconductors and electric vehicles, is expected to close in the first half of Emerson's fiscal 2024.

Harbour Energy to acquire Wintershall Dea's upstream assets for $11.2 Billion

In December 2023 Harbour Energy signed an agreement with BASF and LetterOne to acquire the upstream oil and gas assets of Wintershall Dea for $11.2 billion. This acquisition, which notably leaves out Wintershall Dea's Russian assets, includes a variety of assets such as producing and development assets, exploration rights, and carbon capture and storage (CCS) licenses across multiple countries, including Algeria, Argentina, Denmark, Egypt, Germany, Libya, Mexico, and Norway.

Linda Z Cook, CEO of Harbour Energy, highlighted that this acquisition aligns with the company's goals for energy transition. By acquiring these assets, Harbour Energy aims to shift its portfolio more towards natural gas, thereby reducing its greenhouse gas emissions intensity and broadening its CCS interests into new European markets.

Following the completion of the deal, BASF and LetterOne will collectively hold a 54.5% stake in the expanded Harbour Energy, with BASF owning 39.6% and LetterOne 14.9%. The transaction is anticipated to be finalized in the fourth quarter of 2024.

Occidental Petroleum to acquire CrownRock for $12 Billion

Occidental Petroleum agreed to acquire CrownRock, a U.S. shale oil producer, in a deal worth $12 billion, including debt. This transaction will increase Occidental's influence in the largest U.S. shale oilfield and is set to close in the first quarter of 2024. With this acquisition, Occidental will boost its Permian production by 170,000 barrels of oil and gas per day in the Midland area, raising its total to 750,000 barrels per day.

As of September 30, 2023, Occidental's total production was 1.2 million barrels per day. The CrownRock deal is expected to bring immediate cash flow benefits, estimated at around $1 billion with West Texas Intermediate (WTI) oil priced at $70 per barrel. Notably, nearly half of CrownRock's 1,700 undeveloped locations are profitable with WTI oil at $40 per barrel.

This acquisition will enhance Occidental's scale in the Midland basin, leading to cost efficiencies over time. The current U.S. oil price, hovering around $71 per barrel, is prompting increased production as the Organization of Petroleum Exporting Countries adjusts oil quotas.

ONEOK $19.1 Billion Acquisition of Magellan Midstream Partners

ONEOK Inc's acquisition of Magellan Midstream Partners stands out as a monumental deal, marking a significant conclusion to the year's achievements. ONEOK agreed to buy Magellan in a cash-and-stock transaction valued at approximately $18.8 billion, including the assumption of Magellan's $5 billion debt. This deal signifies ONEOK's expansion beyond natural gas, venturing into the transportation of refined products and oil.

Under the terms of the agreement, ONEOK will pay $25 and 0.6670 shares of its common stock for each Magellan unit. Post-merger, the combined company will have a diversified portfolio, with 44% of its business in natural gas liquids and 21% in refined products.

ONEOK, providing midstream services in states like Montana, Wyoming, North Dakota, Kansas, and Oklahoma, has a market value of $29.5 billion. With this transaction, it becomes one of the biggest midstream service companies in the US.

Chevron's purchase of Hess for $60 Billion

As we welcome the New Year, Chevron Corporation has set a significant and strategic resolution by agreeing to acquire Hess Corporation. This all-stock deal, valued at $53 billion, reflects Chevron's commitment to growth and innovation. For each Hess share, shareholders will receive 1.025 Chevron shares, bringing the total value of the transaction, including debt, to $60 billion.

This expansion includes the Stabroek block in Guyana, known for its profitability and low carbon output, and Hess's Bakken assets, which strengthen Chevron's position in the U.S. oil market and complement its existing operations.

Chevron gains valuable assets including Guyana's rich oil fields, 465,000 net acres in Bakken, assets in the Gulf of Mexico, and a steady cash flow from Southeast Asia's natural gas business.

The deal is expected to contribute positively to Chevron's cash flow per share by 2025, enhance production, and extend growth into the next decade.

Chevron plans to increase its dividend by 8% and boost its share repurchase program, demonstrating a strong commitment to its shareholders.

The company anticipates spending between $19 and $22 billion in capital expenditures and expects to generate $10 to $15 billion from asset sales by 2028, along with significant cost synergies.

ExxonMobil's acquisition of Pioneer Natural Resources for $64.5 Billion

The US oil and gas industry is sparkling with excitement, especially in the Permian Basin.

The ExxonMobil deal is particularly noteworthy. It's set to unite two of the largest landowners in the Permian Basin, stretching across Texas and New Mexico. This isn't just a merger; it's a landmark event that will position ExxonMobil as the leading oil producer in what is arguably the most bountiful oil patch in the US. Reflecting on its history, this deal is ExxonMobil's most significant since its $75.3 billion merger with Mobil in the late 1990s, making it a New Year's resolution of sorts for the company.

• Under the agreement, Pioneer shareholders will receive 2.3234 ExxonMobil shares for each Pioneer share, a generous exchange that echoes the spirit of giving during the holiday season.
• The merger will add a substantial 850,000 net acres in the Midland Basin to ExxonMobil's existing 570,000 net acres.
• But that's not all. This deal promises to boost ExxonMobil's production in the Permian Basin significantly, more than doubling it to 1.3 million barrels per day based on 2023 volumes.
• By 2027, this figure is projected to soar to about 2 million barrels per day. It's a future bright with potential, akin to the hopeful beginnings of a New Year.
• With Pioneer's reputation for low drilling costs and a significant position in the Permian Basin, ExxonMobil's supply costs are expected to drop below $35 per barrel.

Plans are in place to accelerate Pioneer's net-zero plan to 2035 and for ExxonMobil to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions from its Permian operations by 2030.