Oil and Gas Merger and Acquisition in Africa: Key Trends and Prospects

LAGOS (Capital Markets in Africa) – This article explores some of the significant trends that have emerged from recent oil and gas upstream deal activity in Africa following in the aftermath of 2015’s oil price crash, as well as considering the outlook for future transactions and the dynamics in play that influence acquisitions and disposals in the industry.

Africa feels the benefits of oil price stability
Looking from a macro perspective, 2017 saw welcome stability and growth in the oil price, as the global oil and gas industry emerged from the effects of the 2015 downturn. This improvement runs alongside the concerted efforts made generally throughout the sector to reduce costs. As a result, the short to medium term outlook is that price volatility is reduced (but has not disappeared) and the industry is calibrating itself to operate in a world where a $50 per barrel floor is the “new normal”.

But what does this mean for oil and gas deals in Africa? Fundamentally, the continent enjoys the same benefits as those felt by other regions: the gap in value perception between buyers and sellers is reducing and parties now feel sufficiently confident in the prevailing price environment to transact, with an increased willingness to explore innovative commercial structures to bridge valuation or risk allocation concerns. Deals are being done once again. While one should always be cautious in making any generalisations across a continent as diverse as Africa, there are some clear trends we have seen that have widespread applicability to deals in the region.

An extract from Bouncing Back: African Oil and Gas. Please download by clicking: INTO AFRICA PUBLICATION: MAY 2018 EDITION.

Contributor’s Profile
Adam Blythe is a partner in Bracewell’s London office. Adam specialises in oil and gas related transactions, working on acquisitions and disposals, project development, joint ventures and other commercial arrangements across the upstream, midstream and downstream sectors. He has deep experience of African related transactions, particularly in Nigeria, Egypt and Tanzania.