Upstream M&A: struggling to find the one?

1 minute read

Following the oil price collapse from mid-2014, a large number of companies — from private equity-backed vehicles, to the oil majors — have been scouring the market for deeply discounted oil and gas fields. But outside North America relatively few deals have actually been agreed.

So what opportunities are out there? In our latest perspective, we consider how the current market for conventional upstream assets presents companies with a chance to find the right opportunity.

M&A is booming in the US Lower 48, but that doesn't necessarily create an excess of cheap opportunities. Rather it suggests a sweet spot has been found between buyers, who see value (or need) in exposure to the L48 - and sellers, who see attractive exit options. There have, of course, been distressed sellers in the L48, but most companies have opted to restructure in Chapter 11, and when those assets do hit the market everyone knows about it.

Deal announcements January/February 2017

In this report, we examine how companies can better identify assets that are right for them using a three-step approach.

  • What are the 'must-haves' when trying to find an opportunity at a good price?
  • The common characteristics of potential buyers
  • Sealing the deal

The M&A market outside the US Lower 48 represents a buyer's market, but time might be running out. As companies become more confident that the bottom of the market has been hit, more companies will begin to look at inorganic growth options, and their propensity to pay full price for assets will return.

Of course, timing of M&A is critical. It can depend heavily on your view of future oil and gas prices. Either way, it's probably worth seeing what's out there: you wouldn't want to miss out on the right asset.

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