This month the ability to treat corporate mergers as a tax-free pooling of interest expires, so there will be no more jumping into that pool. Does this mean big mergers are over for a while? Hardly. The quest for a better return on capital employed will continue to motivate a lot of action. Even the M&A advisory firms are getting into the act. Last year, Houston's Compass Bank acquired Albrecht & Associates, and Petroleumplace.com acquired 100% of The Oil & Gas Asset Clearinghouse. This year, more such deals followed. IndigoPool.com and Waterous & Co. of Calgary just formed a joint venture technology company to create an international Internet marketplace for oil and gas properties, beefing up IndigoPool's already busy site. We hear that some entire companies will also be marketed on the main site, in addition to the more common individual asset packages. Madison Energy Advisors just agreed to merge into PennNet's Oil & Gas Journal Exchange. Now the combined entity will offer live and online auctions, traditional sales and advisory services. Finally, Randall & Dewey, one of the biggest and first M&A advisors on the scene about 10 years ago, has hired an investment banker to help it sift through the many offers it has received since the energy dot-com boom took off last winter. In the meantime, in early November R&D's first online divestment bid solicitation, an online data room, made its debut. Mergers among oil companies continue to reshape the landscape. The recent announcement of Chevron and Texaco's plans to unite seemed anticlimactic after speculation swirled in the oil patch and on Wall Street for 18 months or so. Similar mergers among peers have taken as long as a year to be approved and closed, so there is probably more drama to come. What are the implications? Despite now being able to cast a much larger shadow, and to pursue opportunities in more exotic places such as Saudi Arabia, the new entity will still be less than half the size of its nearest competitor, BP, in terms of proved barrels of oil equivalent reserves. Its market capitalization will be about $100 billion-a third that of Exxon Mobil's. In terms of capital employed, market cap and reserves, the company will be similar in size to TotalFinaElf, although its 1999 BOE production was greater. The meaning of big keeps expanding, making super-independents with 1 billion barrels of oil equivalent seem smaller and smaller. Analyst Paul Ting with Salomon Smith Barney thinks ChevronTexaco's ROCE may not exceed Chevron's stand-alone return for at least the first or second year. Production growth also may fall below Chevron's stand-alone results-some indictment of so-called merger synergies. One reason is the one-time $1 billion in merger integration costs and the reduction of an estimated 4,000 jobs, with the bulk of the budget cuts in the upstream sector. Another is that the companies say there is considerable overlap in their upstream portfolios. Included in upstream savings is a goal to cut about $300 million out of the combined entity's approximately $900-million exploration plan. "The company needs to clarify whether this capital reduction is a one-off event...or a longer-lasting feature, perhaps due to higher debt," says Ting. "This is important in differentiating ChevronTexaco from the other majors." Meanwhile, stand by for questions from Congress related to the size of these companies, their profits, their production growth, their motivation. U.S. Sen. Chuck Schumer (D-New York) sent a letter to Exxon Mobil chairman Lee Raymond urging him to put the company's record profits to work finding more oil and gas. Schumer must read the business press carefully. He noted that Exxon Mobil's third-quarter earnings were $4.3 billion-a record for any U.S. company in any industry-yet year-to-date spending on exploration is off 24% from the first nine months of 1999. Reduced E&P spending is no doubt a natural extension of the company's merger digestion, its conservative stance with regard to future oil prices, and the timing of various megaprojects around the world. Congressional attitudes may be putting a damper on some M&A activity by the majors as well, thinks Apache chairman Raymond Plank. He recently mentioned to us that the majors seem reluctant to let lose with too many large U.S. assets right now, lest Congress accuse them of focusing too much on overseas plays, to the alleged detriment of American oil and gas needs. Even we are not immune to merger mania. On November 1, Hart Publications merged into Chemical Week Associates, a fast-growing, New York-based magazine publisher that covers the downstream world. With all of Hart's upstream products, including this magazine, the combined entity is now the largest trade publisher dedicated to energy in the world. We follow energy from seismic and well planning through production to refining, chemicals, plastics and adhesives. By the way, next month Oil and Gas Investor marks its 20th anniversary, and we intend to be around for the next 20.