Release Date: May 2008
Next Release Date: May 2009  

• Findings & Background
• Transactions Summary
• Acquisitions
• Divestitures

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Findings

§         Based on EIA’s latest analysis of information on acquisitions and divestitures by foreign direct investors in the U.S. energy industry, net acquisitions were negative (i.e., the value of divestitures exceeded the value of acquisitions) in 2006, as divestitures reached a six year high.

§         The rise in divestitures was driven by a single transaction, Scottish Power’s sale of PacificCorp, the parent of two large electric utilities in the West.

§         Divestitures also rose in the oil and gas production and petroleum refining and marketing and mid/downstream natural sectors.

§         Acquisitions by foreign direct investors rose 24 percent from 2005, but were well below the high levels of several years ago.

§         The three largest acquisitions were for nearly equal amounts, Marubeni (Japan) purchased oil and gas properties in the Gulf of Mexico, Société Générale (France) bought and recapitalized CDX, an unconventional natural gas producer, and International Power (England and Wales) acquired the Coleto Creek power plant in Texas.

Background and Definitions

Foreign direct investment (FDI) is the ownership or control of 10 percent or more of a U.S. company by a foreign investor.[1]  Acquisitions and divestitures by foreign direct investors are purchases and sales, made directly or indirectly, of U.S. businesses (or assets) where either the buyer or the seller, but not both, is a foreign direct investor.[2]  The Energy Information Administration (EIA) issues an update of FDI acquisitions and divestitures of U.S. energy assets each year. The information presented here is derived from company reports and press releases, industry publications, The Online Transaction Roster maintained by FactSet Mergerstat, and company filings with the U.S. Securities and Exchange Commission.[3]

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[1] For further information on foreign direct investment in U.S. energy, see Energy Information Administration, “Foreign Direct Investment in U.S. Energy 2005.”  A good overall treatment of FDI in the United States can be found in Edward M. Graham and Paul R. Krugman, Foreign Direct Investment in the United States, 3rd ed., (Washington, DC: Peter G. Peterson Institute for International Economics, 1995).

[2] Purchases or sales of U.S. energy businesses or assets by one foreign direct investor from or to another foreign direct investor are not included in the transactions discussed here because they do not change the amount of foreign direct investment, only its source.  In some instances, foreign assets owned by the U.S. business that is being acquired or divested are included in the transaction amount. 

[3] The Energy Information Administration does not directly collect any data regarding these types of transactions, nor does it make any attempt to independently value them.