A.T. Kearney Predicts Increased Oil & Gas Mergers and Acquisitions in 2015
Latest report highlights need for O&G companies to seize merger and acquisition opportunities created by lower oil prices
HOUSTON, Jan. 28, 2015 /PRNewswire/ -- In its latest study, "Mergers and Acquisitions in Oil and Gas," A.T. Kearney, a global management consulting firm, predicts a significant increase in mergers and acquisitions in the oil and gas sector for 2015, as a result of oil prices falling below $50 from Brent's $115 high in late June. The intense pricing pressure challenges cash flows, so oil companies of all sizes need to have a clear response to the situation – both near term and longer term. The study authors expect companies to respond, as they did the late 1990s, with mergers and acquisitions to reshape the competitive landscape to their advantage.
Mergers and acquisitions (M&A) in oil and gas (O&G) showed a strong recovery in 2014 after a slow 2013, and with recent oil price decreases and OPEC's decision not to cut output, 2015 is set to witness even further M&A activity across the O&G value chain. These strategic deals will be key to growing value and aiding companies to navigate market turbulence.
"Strategic approaches to M&A are critical to address the intense cost and cash-flow pressures experienced by Oil & Gas players. Our analysis and discussions with industry executives revealed the likely onset of a new wave of mergers and acquisitions across the value chain in the next 6 to 12 months," said Richard Forrest, A.T. Kearney global lead partner for the Energy Practice and co-author of the study.
He added: "The window of opportunity may be shorter than expected, and will be driven by oil price expectations. Those companies with strong cash flow and healthy balance sheets will be able to leverage opportunities, while others will need to define strategies just to survive."
All players in the industry can benefit from a strategic approach to M&A, including International Oil Companies (IOCs), National Oil Companies (NOCs), independent oil companies, service sector businesses and financial investors.
Vance Scott, the A.T. Kearney global oil & gas practice leader and co-author of the study, commented: "We expect to see the largest M&A deal value as well as largest share of deals in the upstream segment where focus on improving performance on a $/BOE basis will dominate. E&P players will drive internal effectiveness measure and portfolio repositioning that will encompass entire company sales and mergers. Consolidation in midstream will continue to be driven by the "MLP advantage" whereas oilfield service provider consolidation will be driven by business volume changes and cost reduction needs. Across sectors, the companies that best anticipate, and prepare to take advantage of the fast-moving and volatile market will be in a much stronger position than their peers."
If you would like a pdf of the report, please contact Meir Kahtan at [email protected] or +1 212 575 8188.
About the Study
To understand how the O&G market could evolve, A.T. Kearney talked with more than 30 senior executives across the globe, spanning the entire value chain from the oil majors, national oil companies, and leading independents to service companies and financial investors. The analysis includes all M&A in the oil and gas industry from 2003 to November 2014. Dealogic is the main source of all M&A data; Thompson is the secondary source. Rystad Energy is the source for all reserves and production-related data, and also helped classify independents.
About A.T. Kearney
A.T. Kearney (www.atkearney.com) is a global team of forward-thinking partners that delivers immediate impact and growing advantage for its clients. We are passionate problem solvers who excel in collaborating across borders to co-create and realize elegantly simple, practical, and sustainable results. Since 1926, we have been trusted advisors on the most mission-critical issues to the world's leading organizations across all major industries and service sectors. A.T. Kearney has 60 offices located in major business centers across 40 countries.
Contact: Meir Kahtan at
Meir Kahtan Public Relations
+1 212 575 8188 or [email protected]
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SOURCE A.T. Kearney
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