Studies: Energy M A to pick up in 2015 after record '14
Vance Scott of Chicago-based consulting firm A.T. Kearney sees more energy mergers and acquisitions in 2015.
- Jordan Blum[1]
- Reporter- Houston Business Journal
- This email address is being protected from spambots. You need JavaScript enabled to view it.[2] | Twitter[3]
Energy mergers and acquisitions are expected to increase this year even after reaching 10-year highs in 2014, according to new reports released Jan. 28.
PricewaterhouseCoopers[4] LLP said M&A activity in the oil and gas industry hit[5] 10-year highs in both deal value and volume in 2014. PwC contended that the increase was driven by so-called megadeals of $1 billion or more. There were 49 megadeals worth $266 billion in 2014, compared to 24 such deals worth $71 billion in 2013.
But Chicago-based consulting firm A.T. Kearney[6] Inc. is projecting 2015 will exceed 2014 in deals and really get moving once low oil prices begin to settle. U.S. oil prices are currently hovering near $45 a barrel.
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"We're expecting an uptick in M&A driven by cost pressure," said Vance Scott[8], a partner and leader of A.T. Kearney's Americas energy practice. "With the decline in price, there's clearly going to be an uptick and a real (M&A) focus, and a lot of these conversations have already happened."
Scott expects most of the M&A activity to occur within oilfield services companies and independent exploration and production companies. That should begin to occur more once oil prices start to settle, which could happen as early as March or the second quarter of the year, he said.
"When prices settle and valuation expectations between buyers and sellers converge, companies that already have short lists of what they want to buy will start moving to capture these key assets," the A.T. Kearney report states.
There was a surge of megadeals in oil and gas in the late 1990s when oil prices dipped to $20 and then even $10 a barrel.
Jordan Blum covers energy for the Houston Business Journal. Read the top Texas energy news in our free weekly newsletter, Energy Inc. Click here to subscribe to the Energy Inc. newsletter[9].
References
- ^ Jordan Blum (feeds.bizjournals.com)
- ^ This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
- ^ Twitter (twitter.com)
- ^ PricewaterhouseCoopers (www.bizjournals.com)
- ^ M&A activity in the oil and gas industry hit (www.bizjournals.com)
- ^ A.T. Kearney (www.bizjournals.com)
- ^ Got Energy? Sign up for our Energy Inc. newsletter here (www.bizjournals.com)
- ^ Vance Scott (feeds.bizjournals.com)
- ^ Click here to subscribe to the Energy Inc. newsletter (www.bizjournals.com)