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Oil, gas mergers hit 10-year high, but not here

| Tuesday, Jan. 29, 2013, 12:01 a.m.

Mergers and acquisitions have diminished in Appalachian oil and gas fields, bucking a national trend that produced a 10-year high in deals across the rest of the drilling industry, PricewaterhouseCoopers said Monday.

The Marcellus and Utica shales produced three deals for about $1 billion in the final quarter of 2012, a fraction of the money exchanged during most of the past three years, according to a quarterly analysis from the accounting firm.

Deals in those gas-rich shale areas had averaged nearly $3.5 billion per quarter before starting to shrink in spring.

The reported numbers are a little lower than reality because some Appalachian properties are included in deals designated primarily for other areas, said Steve Haffner, a Pittsburgh-based partner with the firm's energy practice.

Yet it's clear that interest has shifted toward oil. The nation's oil regions brought the most deals in late 2012.

“This phenomenon of moving from gas to oil is a nationwide one because of the difference in prices,” Haffner said. “The reality is, natural gas prices have been pretty stagnant for the past several quarters, especially when compared to oil.”

Companies spent about $7.2 billion on more than a dozen deals combined in the oil-rich Bakken formation in North Dakota and the Eagle Ford in Texas. There were 22 deals in oil production, compared to five in gas production nationwide.

In total, the firm counted 75 deals of $50 million or more — a rush driven by private equity interest, foreign buyers, shale plays, and fear about looming federal tax and budget decisions, according to PricewaterhouseCoopers.

That put the 2012 yearly total at 204 transactions. Combined they represented $146.2 billion, the second highest total deal value in 10 years, the firm said.

It believes deals will briefly slow as companies assess their assets. Mergers and acquisitions could then pick up as the industry continues to consolidate in 2013. Appalachian deals reflect this: work here focuses on pipeline projects to ship gas for sale. Haffner expects activity to keep moving toward Ohio from Pennsylvania as drillers target the region's higher-priced natural gas liquids, he said.

Fourth-quarter 2012 deals in the Appalachian basin included:

• Gulfport Energy Corp. paid $372 million to Windsor Ohio LLC for 37,000 acres of Utica Shale in eastern Ohio.

• Statoil ASA, Norway's biggest oil and gas producer, spent $590 Million to buy 70,000 acres of Marcellus shale in Ohio and West Virginia from three companies.

• A subsidiary of Crestwood Midstream Partners LP paid $95 million to Enerven Compression LLC for natural gas compression and dehydration assets processing Marcellus shale gas in Harrison and Doddridge counties, West Virginia.

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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