Last updateFri, 03 Jul 2020 5pm

Energy M&A Activity in U.S. Down Big in First Quarter

Enverus has released its first quarter summary of M&A activity, which revealed a substantial collapse as oil prices plunged to 18-year lows. Only $770 million in U.S. upstream deals were completed during the first quarter of 2020—less than one-tenth of the ~$8 billion average for Q1 from 2010-2019. Virtually all deal activity occurred before the global COVID-19 pandemic and production hike from Saudi Arabia slammed markets in early March.

Chemical Activity Barometer Falls Sharply in March

The Chemical Activity Barometer (CAB) from the American Chemistry Council fell 2.6% in March on a three-month moving average basis following a downwardly revised 0.1% gain in February. On a year-over-year basis, the barometer fell 1.3% in March.

The unadjusted data shows an 8.0% decline in March following a 1.1% decline in February and a 1.2% gain in January. The unadjusted decline in March is the largest in the post-World War II period. The diffusion index slumped to 27% in March. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for February was revised downward by 1.13 points and that for January was revised downward by 0.38 points.

Construction Set to Resume on Keystone XL Pipeline

TC Energy Corporation will proceed with construction of the Keystone XL Pipeline Project, an $8.0 billion investment. At 1,210-miles in length, the pipeline will be capable of safely delivering 830,000 barrels per day of crude oil from Alberta, Canada to Steele City, NE where it will connect with TC Energy’s existing facilities to reach U.S. Gulf Coast refiners to meet critical needs for transportation fuel and manufactured products. With pre-construction activities underway, the pipeline is expected to enter service in 2023. 

Goldman Sachs: Shale Positioned Well to Withstand Downturn

In a note dated March 31, Goldman analyst Damien Courvalin says that “(s)hale’s high-pressured wells and short drilling time mean the industry is well positioned to benefit if the current plunge in oil causes long-term damage to production capacity, resulting in a price jump when demand returns,” Bloomberg reports.

“The note of optimism runs counter to the steady drumbeat of bad news that’s hit the shale patch since oil prices collapsed amid simultaneous supply and demand shocks. The price plunge instantly made thousands of prospective shale sites money-losing propositions.” 

DHS Issues Guidance to Clarify Essential Areas of Work

The Department of Homeland Security has issued new guidelines for 21 areas of construction that supports infrastructure on work deemed essential to continue during the coronavirus pandemic.

“On the agency list are construction of energy and renewable energy projects, including their environmental remediation, and construction of onshore and offshore petroleum projects, including pipeline and liquified natural gas (LNG) construction,” Engineering News-Record reports.

“The list also now covers construction of water and wastewater infrastructure, hospitals, including temporary construction, housing, transportation and communications, among others.”

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