Analysis of the Week: $30bn+ M&A Marathon: O&G Majors Ramp up Investments in Renewables and Low-carbon Assets since 2021, with Biofuels Account for $10bn+ of Deals

Biofuels: RNG and Alcohol Fuels Lead!

RNG: $6bn+ of Corporate M&A: bp's $4.1bn purchase of Archaea Energy in Oct'22 represented an EBITDA multiple of 46X, showcasing the value of US's tax credits on Archaea's 29,000 BOE/d pipeline. Shell closely followed by acquiring Danish firm Nature Energy (NE) for $2bn in Nov'22. The deal valued NE at an EBITDA multiple of 62X, primarily due to the company's earnings, which doubled y/y in 2021 and grew by more than 4X since 2018

Alcohol Fuels: $4bn+ of Deals: Chevron's $2.75bn takeover of biodiesel producer REG in Feb'22 marks the segment's largest M&A over the past few years. The deal, which valued REG at a 10X EBITDA multiple, enabled Chevron to access a 30,000 BOE/d production portfolio across the US. Meanwhile, bp's $1.4bn deal to consolidate ownership in its Brazil-focused ethanol and SAF subsidiary Bunge, and ExxonMobil's $145mn investment in US-based Global Clean Energy also represented significant transactions in the segment

Hydrogen: $600mn+ of Investments

Chevron dominated this space, funding companies including Raven SR and Starfire, while Shell, bp and TotalEnergies followed suit. On the technology side, electrolyzer manufacturers and e-fuels producers secured majority of the investments.

Chevron's acquisition of an ~80% stake in the 35,000tpa ACES Delta blue hydrogen project in Texas (Sep'23) and bp's purchase of a 15% stake in the 1.6mmtpa AREH in Australia showcased O&G majors interest in low-carbon fuels projects