Billions of dollars at play in global oil & gas M&A game

While the crude oil price continues to languish, there is no doubt that the oil and gas industry is still at the top of the market with regards to mega deals.

As predicted by many analysts, the sudden decline in crude prices has opened the door for a serious jump in oil and gas sector merger and acquisition (M&A) activity, which appears to have gone to an even higher level on the back of the latest price shock that has seen crude fall to -and stay – below US$50 a barrel.

Leading the way on the service and supply sector has been a number of the biggest names swallowing up smaller rivals or merging with their rivals contemporaries in a bid to build critical mass to add protection against the slashing of oil company Capex.

The latest big oilfield play is right at the top end of the scale with oilfield service giant Schlumberger making a US$14.4 billion takeover offer for downhole equipment specialist Cameron.

The combination features two of the more historic names in oilfield services and will create a drilling behemoth that in 2014 would have had combined revenues of US$59 billion.

That Schlumberger-Cameron merger follows last November’s announcement of Halliburton and Baker Hughes agreement for a mega merger with an equity valued of US$34.6 billion.

And there has been numerous other smaller deals done over the past 12 months as the oilfield services sector continues to have a major focus on reducing costs and combining new technology breakthroughs into complete packages.

The oil companies have not been idle in this time either.

Leading the way is Shell’s US$70 billion takeover offer for BG, which is still clearing final approval hurdles from governments around the globe.

Other M&A deals of note include Spanish petroleum giant Repsol’s $15.8 billion takeover of Canada’s Talisman Energy, and more recently and closer to home, Woodside’s $11 billion bid for Oil Search Ltd.

The driver for many of the oil company takeover and merger activity has been the global LNG market.

Analysts are suggesting that there are more deals to come, with the crash in oil and share  prices creating some real bargains.

Source: PPR