U.S. oil and gas deals jump in 2011

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NEW YORK (AP) -- Interest in U.S. energy companies spiked in 2011 as buyers clamored for more access to oil-rich layers of North American shale, a consulting and accounting firm said.

PwC US, a division of PricewaterhouseCoopers International, said that the value of U.S. oil and gas mergers and acquisitions jumped 35 percent last year to $186.5 billion.

America's oil and gas sector has been a red-hot area for growth in the energy industry thanks to new drilling techniques such as hydraulic fracturing that allow companies to tap vast amounts of oil and natural gas trapped in underground layers of shale. Environmental concerns have yet to dampen industry interest in new drilling projects.

Steve Haffner, a Pittsburgh-based partner with PwC's energy practice said, "The industry continued to make a paradigm shift to shale in 2011."

Haffner said that investors are increasingly looking at the Utica shale region in the U.S. The Utica, located along the Appalachian Mountains, from Virginia to New York, is expected to be rich in oil, making drilling projects more profitable than shale fields that contain mostly natural gas.

U.S. oil prices jumped 19 percent from 2010 to 2011 to an annual average of $95.12 per barrel.

They're expected to keep rising in 2012 as world demand hits a new record. Natural gas prices recently hit a 10-year low.

PwC said there were seven transactions in the Utica Shale that represented $6.7 billion in 2011, a jump from one deal in all of 2010, with a value of $178 million.

While deal making rose in the Utica Shale, it fell off somewhat in the Marcellus Shale, which also runs under New York, Pennsylvania, Ohio and West Virginia. There were a total of 13 deals in the Marcellus Shale in 2011 worth $9.9 billion, compared to 22 deals that totaled $20.3 billion during 2010.

Rick Roberge, a principal with PwC's energy-information unit, said the level of deal making in the U.S. should "remain active in 2012, despite continuing economic uncertainty due to attractive commodity prices."

The PwC report also found that:

--The value of U.S. oil and gas mergers and acquisitions increased 89 percent in the final three months of 2011, when compared with the same part of 2010.

--Foreign companies announced 10 deals in the U.S. oil and gas sector in the fourth quarter.

That's two less than the same part of 2010, but the deals were worth 48 percent more at $13.9 billion.

--Pipeline and storage deals made up the bulk of the deals, adding up to $48 billion in 2011. Deals involving the exploration and production of oil and gas totaled $24 billion; deals involving oilfield equipment totaled $4.5 billion; and deals involving refineries totaled $4.1 billion.

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