Key Conclusions of the Review:
Deal activity slowed dramatically in the second half of the year, particularly in North America.
Deal activity was on a record pace through the first half of 2008, as 203 transactions were announced by July 31. Then the market tailed off precipitously to just 79 in the final five months of the year due to plunging commodity prices and the extreme weakness in equity and credit markets. Activity in November and December was a record low 25 deals, half the historical average.
Deal pricing increased year-on-year, but tumbled in the fourth quarter.
The weighted average proved (1P) implied reserve value increased to $11.51 per barrel of oil equivalent (boe) in 2008, up from $10.01 per boe in 2007. The weighted average proved plus probable (2P) implied reserve value was a five-year high $5.25 per boe in 2008, an increase from $4.67 per boe in 2007. Implied reserve values fell with commodity prices in the fourth quarter of 2008, reaching $2.83 per boe for 2P reserves.
Corporate transaction value and deal count continued to fall.
Corporate transaction value plunged from $64.2 billion in 2007 to $34.2 billion in 2008, which is 72 percent lower than the $120.2 billion announced in 2005. The corporate deal count was a five-year low, with no U.S. corporate transactions in the fourth quarter.
Asset deal value dropped after rising for six consecutive years.
Total worldwide asset transaction value fell to $70.1 billion from the record $88.2 billion in 2007, but was still the second highest ever recorded. Asset transactions accounted for a record 67 percent of total worldwide transaction value and 80 percent of U.S. transaction value.
Unconventional gas resources in North America and Asia-Pacific represented nearly 40 percent of total global activity.
Buyers competed vigorously for coal seam gas assets in Australia and shale gas interests in the U.S. and Canada. As a result, the gas weighting of transacted reserves reached 70 percent, the highest in 10 years.
National Oil Companies (NOCs) continued to be active buyers in the open market.
NOCs and Sovereign Wealth Funds based in Asia, the Middle East, Europe and Latin America accounted for a record high 15 percent of global open market transaction value during the year, including six of the 10 largest asset deals. NOCs have been the most active acquirers in the first quarter 2009.
