As the world’s industries sort through the wide swath of damage left by the financial crisis, top corporate strategists have been left to wonder how they will fund growth without the availability of credit. The oil and gas industry has been able to weather the crisis more adeptly due to record high oil prices over the previous year. As a result, the crisis has created opportunity and heartache for a variety of independent oil and gas companies, creating an atmosphere of consolidation, conservatism, and divesture.
According to an article in the Petroleum Economist, M&A activity within the oil & gas sector over the first three quarters of 2008 amounted to 220 transactions worth $78 billion, or $345.5 million per deal. In 2007, M&A activity in the sector amounted to $152 billion, or $460.61 million per a deal. While 2008 will come to an end without the M&A sector activity surpassing the 2007 level, the fact that the 2008 figure is so high is miraculous considering the credit markets have all but dried up for the last quarter. The financial crisis has created two groups, those with healthy balance sheets are being presented with opportunities to buy proven assets at bargain basement prices while some up and coming companies have been forced to sell promising holdings just to stay afloat. More...
