Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
With WTI in the $50s, the life is being choked out of acquisition and divestitures (A&D). Budgets are also being slashed and a quarter of North American rigs may be mothballed in 2015.
Some deals already underway are being shelved. Potential buyers are shrinking from transactions. And sellers’ asking prices will vary widely with offers buyers throw out.
Deal makers will likely be opportunists with the wherewithal to pick off assets amid uncertainty or at distressed companies.
“Weak oil prices through 2015 will ratchet up the pressure on the most financially stretched in the sector,” said Luke Parker, principal analyst for Wood Mackenzie’s M&A analysis, in a December report. “Expect to see falling deal valuations and the emergence of a true buyers’ market.”
For instance, Sheridan Production Partners said in December it raised $1.5 billion in investment capital to buy U.S. onshore U.S. producing oil and gas properties—on the cheap.
Lisa Stewart, Sheridan founder and chairman, said falling petroleum prices create opportunities for the firm as companies seeking to pay down debt and “sell mature properties with predictable production that fit our successful business strategy.”
Wood Mackenzie said A&D won’t recover until a new consensus emerges perhaps three to six months after prices stabilize.
Recommended Reading
SilverBow Rejects Kimmeridge’s Latest Offer, ‘Sets the Record Straight’
2024-03-28 - In a letter to SilverBow shareholders, the E&P said Kimmeridge’s offer “substantially undervalues SilverBow” and that Kimmeridge’s own South Texas gas asset values are “overstated.”
SM Energy Declares Quarterly Cash Dividend
2024-03-26 - SM Energy’s dividend will be paid out on May 3 to stockholders on record as of April 19.
Matador Stock Offering to Pay for New Permian A&D—Analyst
2024-03-26 - Matador Resources is offering more than 5 million shares of stock for proceeds of $347 million to pay for newly disclosed transactions in Texas and New Mexico.
Par Pacific Asset-based Revolving Credit Bumped Up by 55%
2024-03-25 - The amendment increases Par Pacific Holdings’ existing asset-based revolving credit facility to $1.4 billion from $900 million.
California Resources Corp. Nominates Christian Kendall to Board of Directors
2024-03-21 - California Resources Corp. has nominated Christian Kendall, former president and CEO of Denbury, to serve on its board.