Oil price crash and the coronavirus pandemic led to a significant slowdown in the sub-Saharan Africa deal activity in 2020, the Africa Oil Week May 2021 report has indicated.
Titled ‘Sub-Saharan Africa Upstream M&A: What could be sold?’, the report showed that deal spend dropped by 80.70 per cent to $1.1bn in 2020 compared to $5.7bn in 2019.
“COVID-19 and oil price uncertainty led to historic lows for M&A (Mergers and Acquisitions) spend in 2020,” it stated.
Mozambique led the top 10 deals by spend since the past five years, followed by Nigeria.
It showed that the country’s pre-production assets accounted for 80 per cent of volumes traded in the year under review.
Liquefied natural gas in Mozambique was a stand-out, but most deals involved less than 500 million barrels of oil equivalent, it also revealed.
According to the report, published by Hyve Group Plc in partnership with Wood Machenzie, the 2020 oil price crash increases focus on resilience.
It added that as oil prices recover in the short term, bid-ask spreads may widen as sellers try to extract maximum value, while above-ground risks, oil price risks and access to finance on reasonable terms continue to shrink the pool of buyers.
The Africa Oil Week is the global platform for stimulating deals and transactions across the African Upstream.
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