Foreign Direct Investment Acquisitions and Divestitures for the Year 2006

FDI acquisitions and divestitures in the U.S. energy industry both increased in 2006, with acquisitions up by 24 percent to $9.6 billion and divestitures increasing almost four-fold to $14.5 billion (Table 1). In comparison, the total equity value of mergers and acquisitions in all industries (energy and non-energy) that involved at least one

U.S.

company rose less, by 20 percent.[4] The large increase in

U.S.

energy FDI divestitures was fueled by one very large transaction, while there were no large transactions in FDI acquisitions. Net acquisitions were negative for only the third time since 1989, when EIA began publishing FDI acquisitions and divestitures. At $-4.9 billion, net acquisitions were more than ten times the value compared to the other two years in which net acquisitions were negative.

Although increasing markedly in 2006, total FDI acquisitions in U.S. energy have not risen to the values reached in 1998 through 2002, when the single largest acquisition in each year was greater than (in real dollars) the total of all acquisitions in 2006 (Figure 1). The oil and gas production sector, which included two of three large transactions, was the leading contributor to the 2006 total (Table 2). Petroleum refining and marketing and mid/downstream natural gas had the second highest amount of acquisitions, followed by electric power. Acquisitions in coal were zero for the seventh straight year.

The increase in total FDI divestitures was driven by one large divestiture in the

U.S.

electric power sector (Table 3). Without that one transaction, divestitures would have increased only 78 percent and net acquisitions would have been positive. Increased divestitures in the petroleum refining and marketing and mid/downstream natural gas sector were the second-largest contributor to the increase, although they had been very small in 2005. Oil and gas production divestitures, while more than doubling, were the third-largest contributor, while coal divestitures provided no contribution for the second-straight year.

A list of FDI acquisitions and divestitures of

U.S.

energy assets in 2006 that were valued at more than $100 million can be found in Tables 2 and 3, respectively.


Table 1. Value of Acquisitions and Divestitures of U.S. Energy Assets by Foreign Direct Investors, 2002-2006
(Million Current Dollars)
	2002	2003	2004	2005		2006
Acquisitions
Oil and Gas Production^a	809	386	3,875	R	5,254	5,505
Petroleum Refining and Marketing and Mid/Downstream Natural Gas	8,196	1,831	1,994		1,634	2,448
Coal	0	0	0		0	0
Electric Power	9,447	724	1,937	R	860	1,635
Total Acquisitions	18,451	2,941	7,806	R	7,748	9,588
Divestitures
Oil and Gas Production^a	0	1,998	464		684	1,476	October
Petroleum Refining and Marketing and Mid/Downstream Natural Gas	1,629	0	2,207	R	238	3,810
Coal	0	738	1,594		0	0
Electric Power	2,723	459	0		2,047	9,200
Total Divestitures	4,351	3,195	4,265		2,969	14,486
Net Acquisitions	14,100	-254	3,541	R	4,779	-4,898
^aIncludes oilfield services companies and petroleum refining and marketing assets of integrated petroleum companies.
Notes: Only acquisitions and divestitures greater than $100 million are included. R = revised. Totals calculated from unrounded data.
Sources: 2006: Tables 2 and 3. 2002-2005: Energy Information Administration, Energy Information Administration, "Acquisitions and Divestitures by Foreign Direct Investors in U.S. Energy 2005," Table 1, http://www.eia.doe.gov/emeu/finance/fdi/2005a&d.pdf.

Value of Acquisitions in U.S. Energy by Foreign Direct Investors, 1981-2006

[4] Total value measured as base equity price only. “Mergerstat Free Reports: M&A Activity U.S. and U.S. Cross-Border Transactions,” FactSet Mergerstat, http://www.mergerstat.com/new/free_reports_m_and_a_activity.asp, May 2007.

Transactions Summary