The oil and gas sectors are proving to be one of the most resilient global industries for mergers and acquisitions, says Ernst & Young's new report. Globally, 1,322 oil and gas transactions were announced in 2011, an increase of more than 5% compared to 1,258 in 2010.

Yet the global aggregate value of these transactions in 2011 totalled US$317 billion, about 7% below 2010’s US$341 billion, largely as a result of a lack of mega deals. Globally, 71 oil and gas transactions were valued in excess of US$1 billion, compared to 76 the year before.

"The oil and gas market has proved that it can adapt to higher levels of uncertainty and keep transacting," says Sanjeev Gupta, Asia-Pacific Oil & Gas Leader and a Transaction Advisory Services specialist Partner at Ernst & Young. "The key questions now are how it will cope with the combination of commodity price volatility and structural contraction in global debt capacity."

The upstream segment remained the most active, representing 75% of total Asian deal volumes and 72% globally. Amongst $66 billion globally targeted shale related transactions, unconventional is rapidly emerging as the new conventional.

Although most of the deal activity has been in North America, China is the largest shale gas resource holder in the world, with 19% of global resources. If the potential in this asset base can be unlocked, this could transform the oil and gas landscape in years to come.

Activity in the downstream segment declined modestly during 2011, although overall values were comparable to 2010 levels. Ownership change in refining and retail in mature markets continued, stemming from ongoing portfolio rebalance and capital allocation reviews amongst the majors.

"Downstream activity will continue but may be more concentrated in storage and midstream rather than refining," comments Gupta.

Oilfield services companies, like their customer base, are globalising and consolidating. Many of the larger players are well-capitalised and opportunistic, and financial players also remain active. As a result, the segment saw an increase in deal activity in 2011 and a positive outlook for 2012 underpinned by those seeking new geographies, new customers or new technologies.