The prospect of large oil reserves in Rocky Mountain shale and tight-sands formations generated nearly $10 billion in merger and acquisition deals in the region in 2011, according to two studies released Wednesday.
The $9.9 billion in deals represents a 32 percent increase over 2010, according to a study by accounting and consulting firm Deloitte LLP
“It is clear people are really focused on these oil-rich plays,” said Roger Ihne, Deloitte’s Mid-Americas portfolio leader.
The biggest draw in the region is the Niobrara shale formation or “play,” which stretches from El Paso County to into Wyoming, said Pete Stark, a vice president consultant IHS Inc.
“The little guys and some larger independents developed the resource,” said Stark. “They ‘derisked’ the play. Now the big companies with resources to develop hundreds or thousands of wells move in.”
Denver and Colorado will be a focal point in that development, according to consultant PricewaterhouseCoopers.
“Rocky Mountain deals were of particular focus for many energy companies throughout 2011,” Rowena Cipriano-Reyes, a Denver-based PwC partner, said in a statement.
“With Colorado’s geographical convenience and proximity to booming oil and gas markets, companies will remain drawn to this region in 2012,” Cipriano-Reyes said.
In 2011 there were 191 deals nationally with values greater than $50 million, accounting for $186.5 billion — 35 percent increase over 2010, according to PwC.
Shale plays, such as the Niobrara and the Marcellus in Pennsylvania and New York, also attracted 40 transactions by foreign buyers, worth $56.4 billion — a 55 percent jump over 2010, according to PwC.
The bulk of the deals in the Rocky Mountain region — $7.2 billion — were for oil-field properties, according to Deloitte.
The remaining deals were for infrastructure to process and move oil and gas, $2.3 billion, and oil-field services, $200 million.
Among the deals in Colorado in 2011 were the acquisition of 46,000 acres of leases by ConocoPhillips from Denver-based Lario Oil & Gas Co. for an undisclosed sum and Anadarko Petroleum Corp.’s purchase of BP’s Adams County gas plant for $576 million.
Anadarko, one of the drillers in the Weld County section of the Niobrara, last year estimated the reserves in the formation there to be equivalent to 500 million to 1.5 billion barrels of oil.
“This is the natural evolution,” said IHS’s Stark. “As we move from a wildcat to production we’ll see more investment.”
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
