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January 10, 2019

Surviving the downturn: five years of M&A in oil and gas

GlobalData’s latest thematic report, M&A in Oil and Gas suggests that M&A activity in the global oil and gas industry in recent years was largely driven by the oil price crash, as companies attempted to survive through one of the most severe downturns in decades.

By GlobalData Energy

GlobalData’s latest thematic report, M&A in Oil and Gas suggests that M&A activity in the global oil and gas industry in recent years was largely driven by the oil price crash, as companies attempted to survive through one of the most severe downturns in decades.

Oil prices plummeted from $100 a barrel in 2014 to around $30 in 2016, eroding revenues for companies across the oil and gas value chain and leaving thousands of people unemployed. Falling revenues and rising debts compelled oil and gas companies to realign their strategic objectives and reshape their portfolios, leading to a large number of M&A deals.

Oil and gas companies executed around 10,000 M&A deals in the five years to November 2018. More than 60% of the deals that were completed were in the upstream sector. The shale patches in the US and the oil and gas fields in the North Sea continental shelf featured prominently in these upstream deals. Oil majors, especially Total, ExxonMobil, Chevron, Equinor, and Shell, were involved in a number of deals as they acquired companies and assets at attractive valuations, while also offloading the ones that could impact profitability.

The slowdown in upstream activity due to low oil prices also had a drastic impact on the equipment and services sector. As oil and gas companies scaled back their operations and postponed expansion plans, number of market opportunities declined considerably for oil field service providers, leading to an industry-wide consolidation.

GlobalData’s thematic research identifies upstream companies, such as, Felix Energy, Endeavor Energy Resources, and Laredo Energy; and midstream players, namely, American Midstream Partners and WhiteWater Midstream as potential acquisition targets in the oil and gas industry over the next couple of years.

Potential M&A targets in the oil and gas industry over the next two years

Source: GlobalData Thematic Research                                                                                                                               ©GlobalData

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