Foreign Direct Investment Acquisitions and Divestitures for the Year 2005

Total acquisitions and divestitures by FDI in U.S. energy fell from $12 to $10 billion in 2005 (Table 1). In contrast, the equity value of acquisitions and divestitures in all industries (energy and non-energy) that involved at least one U.S. company rose 50 percent to $1.2 trillion in 2005.[4] This all-industry-transactions total has been rising since 2003, while transactions in U.S. energy by FDI fell in 2003 as well as in 2005.

Total acquisitions by FDI in U.S. energy in 2005 fell 9 percent, a small change given the large year-to-year variance in this data series (Figure 1). After five years of substantially higher values, acquisitions by FDI have held near the low levels seen in most of the 1990s for the third year in a row. The most notable change in acquisitions by FDI occurred in electric power, where purchases fell 68 percent, and in oil and gas production, where the number of transactions greater than $100 million rose from five to nine (Table 1).[5] The largest single purchase by FDI in 2005 was only $0.5 billion, while there were two acquisitions of almost $1 billion each in electric power in 2004.

In 2005, total divestitures by FDI in U.S. energy fell to $3 billion, their lowest level since 1999, with only four transactions over $100 million. In 2004, there were eleven divestitures by FDI over $100 million. All sectors of the industry experienced major changes in divestitures in 2005. Sales in coal and in petroleum refining and marketing and mid/downstream natural gas fell, with only one small deal between them, while divestitures in oil and gas production, and especially in electric power, increased.

A list of publicly reported acquisitions and divestitures of U.S. energy assets by FDI in 2005 that were valued at more than $100 million can be found in Tables 2 and 3.


Table 1. Value of Acquisitions and Divestitures of U.S. Energy Assets by Foreign Direct Investors, 1995-2005 (Million Current Dollars)
	1996	1997	1998	1999	2000	2001	2002^b	2003		2004	2005
Acquisitions
Oil and Gas Production^a	368	1,386	53,892	369	31,373	12,579	809	386		3,875	4,813
Petroleum Refining and Marketing and Mid/Downstream Natural Gas	1,302	463	3,167	336	717	1,072	8,196	R1,831	^c	1,994	1,634	^d
Coal	204	99	400	1,100	0	0	0	0		0	0
Electric Power	0	1,390	536	13,003	11,964	515	9,447	724	^c	1,937	623
Total Acquisitions	1,874	3,338	57,995	14,808	44,054	14,166	18,451	R2,941		7,806	7,070
Divestitures
Oil and Gas Production^a	660	340	585	1,072	11,387	2,319	0	1,998		464	684
Petroleum Refining and Marketing and Mid/Downstream Natural Gas	802	959	881	1,272	895	1,798	1,629	0		2,207	108
Coal	0	47	2,312	0	0	0	0	738		1,594	0
Electric Power	NA	528	0	60	4,329	0	2,723	459		0	2,047
Total Divestitures	1,462	1,874	3,778	2,404	16,611	4,117	4,351	3,195		4,265	2,839
^aIncludes the petroleum refining and marketing assets of integrated petroleum companies and oilfield services companies.
^bBeginning in 2002, only acquisitions and divestitures greater than $100 million are included in this table. That year, all acquisitions less than or equal to $100 million totaled $332 million and all divestitures less than or equal to $100 million totaled $135 million.
^cIncludes half of an acquisition that was in both midstream natural gas and electric power.
^dIncludes convenience stores that do not sell petroleum products.
NA = Not available.
Notes: 1995 divestitures do not include DuPont's $8.8-billion stock buyback. 1998 divestitures do not include Union Pacific Resources' acquisition of Norcen Energy Resources (Canada) because most of Norcen's assets were not in the United States and an estimate of the purchase price of Norcen's U.S. assets was not available. Totals calculated from unrounded data.
Sources: 2005: Tables 2 and 3. 1995-2004: Energy Information Administration, "Direct Acquisitions of U.S. Energy Assets by Foreign Investors Rebound in 2004, but Still Below Recent Average," Table 1, http://www.eia.doe.gov/emeu/finance/fdi/2004a&d.pdf.

Value of Acquisitions in U.S. Energy by Foreign Direct Investors, 1981-2005

[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.

[5] For integrated petroleum companies (companies with operations in both oil and gas production, and refining and marketing) whose primary activity is oil and gas production, the oil and gas production category includes their petroleum refining and marketing assets because transactions are not usually broken down by industry sector and companies are classified by their major activity. For an integrated petroleum company whose primary activity is petroleum refining and marketing, the reverse would be true. Since the primary activity of most integrated petroleum companies is oil and gas production, its value may be overstated and the value of transactions in the petroleum refining and marketing and mid/downstream natural gas sector may be understated. Oil and gas production also includes oilfield services companies.

Transactions Summary