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Mike Rosendahl

E: mrosendahl@pcecompanies.com

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Industry Trends

Oil Producers Unsure Where To Invest Excess Cash

Oil-and-gas companies face conflicting messages regarding the energy transition, with demand for fossil fuels remaining strong while pressure mounts to cut emissions and invest in renewable energy. While many energy companies are still figuring out where to invest, some are reluctant to invest in new oil and gas production due to pressure to return cash to shareholders, resulting in insufficient investment to meet demand trends and net-zero targets.1

The U.S. Leads Europe In The Pursuit Of Hydrogen Energy

The United States has a lead over Europe in the green hydrogen industry due to generous subsidies outlined in the Inflation Reduction Act. According to Bank of America estimates, the Act offers a production tax credit of up to $3 a kilo of clean hydrogen, which means green hydrogen could be competitive with gray hydrogen by around 2025. This is five years earlier than in Europe, luring investment away from Europe to the U.S.2

Oil Demand From China Increases the Global Shipping Costs

The increased recovery efforts from China have stimulated demand for crude oil, driving up charter rates for large crude tankers. Vessels strategically placed to transport U.S. crude to China are in great demand, causing rates for the most desirable tankers to double in just a month. This increased Chinese energy demand may lead to a global rise in gasoline and natural-gas prices, which could challenge central banks trying to control inflation.3

U.S. Solar Industry Breaks Records and Predicts Continued Growth

The U.S. installed 20.2 GWdc of solar P.V. capacity in 2022, bringing the total to 142.3 GWdc, enough to power 25 million homes. Solar accounted for 50% of all new electricity-generating capacity added, and residential solar had a record year. The industry is predicted to grow to over 700 GWdc by 2033, thanks to the passage of the Inflation Reduction Act, despite supply chain challenges causing downturns in other market segments.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • South Jersey Industries, Inc.
  • J.P. Morgan Asset Management, Inc.
  • $7,874.82
  • Con Edison Clean Energy Businesses, Inc.
  • RWE Renewables Americas, LLC
  • $6,800.00
  • Great River Hydro, LLC
  • HQI US Holding LLC
  • $2,000.00
  • MountainWest Pipeline, LLC
  • Williams Partners Operating LLC
  • $1,500.00
  • Grand Prix Natural Gas Liquids Pipeline
  • Targa Resources Corp.
  • $1,050.00
  • Alaska Pipeline Company/ENSTAR Natural Gas Company/Cook Inlet Natural Gas Storage/NORSTAR Pipeline
  • TriSummit Utilities Inc.
  • $800.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Solops, LLC
  • Denham Capital Management LP
  • n/a
  • Morgan Royce Industries, Inc.
  • Auxo Investment Partners, LLC
  • n/a
  • NeoGraf Solutions, LLC
  • Edgewater Capital Management, LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • 220 megawatts solar assets
  • Altus Power, Inc.
  • $293.00
  • Gray Oak Pipeline, LLC
  • Enbridge Inc.
  • $172.00
  • LF Bioenergy
  • Marathon Petroleum Corporation
  • $100.00
  • Assets of KO Transmission
  • Columbia Gas Transmission, LLC
  • $80.00
  • Rochester Wire and Cable, LLC
  • Hexatronic Group AB
  • $55.00

 

Source S&P Capital IQ as of 4/14/2023 and PCE Proprietary Data

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PCE Transactions

Contacts

Michael Rosendahl

New York Office

201-444-6280 Ext 1 |

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Joe Anto

New York Office

407-621-2141 |

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Eric Zaleski

Chicago Office

847-239-2466 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Ryan, C. “Big Oil Gushes Cash Because It Doesn’t Know Where to Invest.” The Wall Street Journal, 9 March, 2023.
  2. Ryan, C. “In Green Hydrogen Race With the U.S., Europe Is Hobbled.” The Wall Street Journal, 22 March, 2023.
  3. Paris, C. & Wallace, J. “Surging Chinese Oil Demand Pushes Shipping Costs Sharply Higher.” The Wall Street Journal, 17 March, 2023.
  4. “U.S. Solar Market Insight.” Solar Energy Industries Association, 9 March, 2023.
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