* More than $30 bln of deals signed since late November
* Confidence in oil price recovery fuels growth drive
* Companies to focus on east Europe, Latin America, Africa
* Graphic on oil and gas M&A in 2016 - http://tmsnrt.rs/2jv9If6
By Ron Bousso
LONDON, Jan 19 (Reuters) - The world's top oil companies areback in acquisition mode, targeting smaller exploration anddevelopment firms to boost oil and gas reserves rather than themega-mergers that followed previous slumps in crude prices.
Since late November, major oil companies have announced 11deals worth more than $500 million each with a combined value of$31 billion, the clearest sign yet that oil executives are moreconfident a recovery is underway.
When crude prices collapsed in the second half of 2014,large oil firms slashed spending on exploration and productionand offloaded assets to reduce debt so they could cope withlower revenue from oil and gas sales.
But with crude reservoirs declining at a rate of 10 percenta year in some cases, major oil companies are now looking tosnap up assets to start growing again and there are plenty ofsmaller firms burdened with debt looking to sell.
"You're seeing the majors sharpening their pencils after along while and actually flipping around from disposals toacquisitions," said Tony Durrant, chief executive of Britishenergy firm Premier Oil, which is looking to sellseveral stakes in its North Sea operations.
Total acquisitions of oil and gas fields, known as upstreamassets, tripled to $31 billion in December from a month earlier,when the Organization of the Petroleum Exporting Countriesagreed to cut output for the first time in eight years,according to data from consultancy Energy Market Square.
Deals in the last month of 2016 alone accounted for nearly aquarter of total activity during the year. (http://tmsnrt.rs/2jv9If6)
MAJOR DEALS
BP announced a string of investments in the last twomonths of 2016, including a $1 billion partnership withDallas-based Kosmos Energy in Mauritania and Senegal inWest Africa, as well as acquisitions in Abu Dhabi andAzerbaijan.
The British company also spent $375 million on a 10 percentstake in Eni's giant Zohr gas field in Egypt whileRussian oil giant Rosneft bought 30 percent stake ofthe same field for $1.575 billion.
France's Total and Norway's Statoil bought into Brazil's lucrative sub-salt deepwater oil fieldswhile ExxonMobil Corp bought assets in Papua New Guineato meet growing Asian demand for liquefied natural gas.
The trend continued in January with Total boosting its stakein Uganda's Lake Albert oil project by snapping up most ofTullow Oil's stake for $900 million.
ExxonMobile and Noble Energy also struck deals worthnearly $10 billion combined for a larger slice of the PermianBasin, the largest U.S. oil field.
While deal making outside the United States almost ground toa halt at the start of 2016, acquisitions in North Americanshale basins have continued at a steady pace.
In the Permian Basin, for example, the time it takes toproduce oil and gas after an initial investment is far quickerand cheaper than developing conventional fields over three tofive years.
ONLY CHOICE
More deals are likely this year as the large overhang ofcrude oil in the world that has weighed on the market since 2014continues to clear and oil prices rise.
"When you can cut capex (capital spending), two-and-a-halfto three years later you see production decline and reservesdepleting and you have one choice only and that is going afterhigh quality resource," said Sachin Oza, co-manager with StephenWilliams of the Guinness Global Oil and Gas Exploration Trust.
"If you've not spent any time filling your hopper with theseopportunities that take five years to build up, there is onlyone choice: you have to buy them," said Oza.
The Guinness Trust is a fund that invests in firms in theearly stages of exploration or development of energy resourceswhich it believes will attract investment from oil majors.
Investors reckon large firms will focus on underdevelopedbasins in east and west Africa, Romania and Albania, as well asnascent Latin American reserves in places such as Colombia, allareas where the growth potential is seen as greater than inestablished regions such as North America and the North Sea.
While slides in oil prices typically unleash a wave oftakeovers, companies emerging from the current downturn aregenerally shunning outright acquisitions and instead looking atspecific deals for specific fields.
After a prolonged period of low oil prices in the late 1990sExxon merged with Mobil, Total merged with Elf Aquitaine andPetrofina, Chevron bought Texaco, BP snapped up Amocoand ARCO and Conoco and Philips merged.
This time round, the only stand-out acquisition has beenRoyal Dutch Shell's takeover of BG, which was announcedin April 2015 and completed in February a year later for $53billion.
BUYER'S MARKET
As large oil firms are wary of increasing their debt burdenat this point, investors say corporate acquisitions are likelyto be limited in numbers and scope but oil field assets are verymuch in the crosshairs.
Oil majors are opting for joint ventures to develop specificfields in complex deals, such as share swaps or deferredpayments, to lower their risk and limit the amount they need tospend upfront following two years of budget cuts.
"The international (ex-U.S.) asset market is a buyer'smarket, as sellers continue in balance sheet preservation mode,"said Charles Whall, energy portfolio manager at Investec AssetManagement.
"European majors, which already have large dividendcommitments, are unwilling to use equity for assets withoutimmediate cash flow ... Most of these asset deals are structuredto minimise the debt impact in the near term," he said.
Such deals also mean the sellers can retain a stake in theassets as their value rises with oil prices, said Oza andWilliams at the Guinness Trust.
Analysts say for much of 2015 and 2016 there was subduedactivity because buyers and sellers were too far apart on price.
Buyers hunting for bargain-basement deals were frustrated bysellers holding out for better terms but as oil prices havestarted to stabilise there has been more convergence.
According to Martijn Rats, equity analyst at Morgan Stanley,most of the deals announced in recent months have been based ona long-term oil price of about $60 a barrel to $65 a barrel.
While that is significantly lower than before the collapsein oil prices from a 2014 peak of $115 a barrel, it is stillabove current long-term oil price forecasts, Rats said.
(Additional reporting by Karolin Schaps; editing by DavidClarke)
Tullow Oil (TLW)
BP (BP.)
