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U.S. Energy M&A Reaches New Annual Record

Two of the five largest U.S. M&A transactions ever announced in the energy sector have occurred in the past three months, which has caused the dollar value of energy sector M&A to reach a new annual record.  According to data from S&P Global Market Intelligence, U.S. energy M&A deal value stands at over $221 billion year-to-date, topping the previous annual record of $219.1 billion set in 2014.

Most recently, Sunoco Logistics Partners L.P. (NYSE:SXL) (SXL) entered into a definitive agreement to acquire Energy Transfer Partners, L.P. (NYSE:ETP) (ETP) from Energy Transfer Equity, L.P. (NYSE:ETE) and other shareholders, in a transaction valued, with the inclusion of assumed liabilities, at $59.9 billion on November 20, 2016. That deal ranks as the third-largest U.S. energy M&A deal ever announced. On September 5, 2016, Canadian energy transportation and distribution company Enbridge Inc. (TSX: ENB) entered into a definitive agreement to acquire Spectra Energy Corp. (NYSE:SE) in a deal valued at $47.5 billion. In terms of valuations for announced U.S. energy M&A deals, the average multiple based on a ratio of a target’s twelve-month trailing EBITDA to the announced deal value was 11.1x  for deals occurring this year, compared to a ratio of 14.5x for deals announced in 2014, the previous record year.

US Announced Energy Sector M&A $bil

This year’s results would have been even larger, if not for the fact that the two largest U.S. energy M&A deal cancellations ever occurred this year. Energy Transfer Equity, L.P. (NYSE:ETE) cancelled the $67.2 billion acquisition of Williams Companies, Inc. (NYSE:WMB) on June 29, 2016, in a transaction originally announced in June 2015. Prior to this, on April 30, 2016, Halliburton Company (NYSE:HAL) cancelled the proposed $39.5 billion acquisition of Baker Hughes Incorporated (NYSE: BHI), which was initially announced in November 2014.

In terms of billion-dollar plus energy M&A deals, this year may fall short of the previous annual record. To date in 2016 there have been 24 announced U.S energy M&A deals of $1 billion or more. While that’s ahead of last year’s full count of 20 U.S. energy M&A deals of that dollar size, the current year seems headed to miss the record year of 2014, when 36 U.S. energy sector M&A deals of $1 billion or more were announced.

Leading US Announced US Energy M&A Transactions