July 28, 2016 / 4:05 PM / 3 years ago

M&A activity in U.S. oil industry pick up in second-quarter: PwC

(Reuters) - Dealmaking in the U.S. energy industry improved in the second quarter after five subdued quarters and activity is expected to accelerate in the second half of the year, consultant PwC said in a report on Thursday.

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. REUTERS/Nick Oxford

Stabilizing crude oil prices and optimism that a recovery is within sight has narrowed the bid-ask spread among oil producers, which led to the higher deals being struck, PwC said.

While the number of deals in the sector rose to 51 in the second quarter from 39 in the first quarter, the overall value of the deals fell to $26.1 billion from $28.1 billion, PwC said.

A majority of the deals – 35 out of 51 – were among oil and gas producers, and represented an 84 percent rise from the first quarter, as deal-making in the U.S. shale patch made a comeback.

The Permian basin in Texas and the Marcellus basin, which straddles Pennsylvania and West Virginia witnessed the most activity among shale plays.

The deals in the quarter included QEP Resources Inc making a move in June to buy acreage in the Permian Basin in Texas and Marathon Oil Corp’s plan to buy assets in Oklahoma.

Devon Energy Corp and Pioneer Natural Resources Co were among the other companies that struck similar deals.

Heavily leveraged oil producers have been divesting assets to pay down debt, while bigger companies are selling non-core assets to fund investment.

However, M&A activity among pipeline companies continued to fall, with eight deals being struck in the latest quarter, down from 11 in the prior quarter, PwC said.

One major deal that fell through was Energy Transfer Equity walking away from a planned takeover of Williams Cos Inc after numerous lawsuits and heated arguments since the two reached a deal last September.

Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza

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