Oil And Gas Mergers Are Finally Making A Comeback

After going through an acute dormant phase for almost two long years, the field of Oil and Gas has again begun to see new developments on the mergers and acquisitions front. The dormant phase had been a result of the oil bust in around 2014, when a lot of banks had tightened the lending processes. This resulted in the various distressed drillers, buyers and sellers to remain at odds over the impending value of energy assets. But now, the tables seem to be gradually turning, what with the gold rush in Texas’ prolific Permian basin as well as the rising prices of crude oils, with an easing of the capital markets, have together resulted in the thawing of the persistent M&A freeze.

The first two weeks of November saw a great upstream of oil and gas deal making, reportedly about $56.7 billion, as opposed tot he sluggish $26.8 billion, which was seen at the same time last year. While there have been a few deals, that have made headlines, these are especially in the midstream pipeline and storage sector as well as downstream refining and marketing space. But what has taken away the metaphorical cake is the part of this industry, which is responsible for the extraction of oil and gas, more commonly known as the upstream exploration and production sector. There reportedly were six deals amounting worth a billion dollars or more in overall upstream mergers and acquisitions.

“The increase in transaction activity in the exploration and production space really started in the second quarter, and that was on a slightly lagged time-line to when commodity prices started to recover.” This was stated by Doug Meier, who is the head of PwC’s oil and gas sector deals practice. This has been possible as a result of the large gap being narrowed between, what the buyers are willing to pay and much are the sellers willing to accept, this was reported by analysts. While many deals were made in the beginning of the year, this was because the various sellers needed cash to pay down their debts. But now, as things have progressed there are a lot of Equity firms that bough these energy resources, which now are reaching the end of their holding periods and thus as a result have to look for means to divest them. The region of Texas has been proven to be recovering more and more when compared to other regions.

The most interesting part about these recoveries is the fact that they are highly driven by sales of undeveloped acreage, as opposed to the already existing reserves. The reported value of these acreage purchases is 25$ million or more, these have topped 2014’s total of $10 billion in the third quarter. The current business cycle has shown remarkable possibilities as the dealers have been able to slash capital spending in areas that didn’t seem economical.

There are many such aspects of the Mergers and Acquisitionsindustry, which help the finance professionals track the development of certain fields. As this sector begins to grow in popularity, the professional courses for the same become highly sought after. This is also the reason why institutes like Imarticus Learning have become quite popular among finance aspirants, as they offer courses in Retail Management, Mergers and Acquisitions and so on.