Asset Transactions Booming in Oil & Gas Sector

A total of $75 billion in unconventional oil and gas assets changed hands last year according to a report on MarketWatch citing a study by international consulting group IHS. That’s a record high for shale gas and other non-conventional hydrocarbon deposits like coal-bed methane.

Much of the activity has taken place in the US and Canada, where a stable political environment and huge and easy-to-reach shale plays have boosted the demand for a piece of the action.

MarketWatch also noted the decline in total oil & gas transactions though:

Unconventional oil and gas deals represents 48% of total world-wide merger-and-acquisition spending in exploration and production assets last year, according to the study. However, total global upstream merger and acquisition transaction value, including corporate mergers, fell 30% from an all-time high in 2010, which was driven by massive asset-divestiture programs.

The IHS study also said that small oil & gas exploration and production companies that have claimed large tracts of exploration areas may not have access to the capital necessary to develop the fields. In such cases, these small-cap companies make enticing takeover targets for the supermajors and national oil companies that have had trouble increasing reserves organically.

Paul Ausick