Analysts predict another round of oil mergers and acquisitions
The oil industry is on the verge of another dizzying round of mergers and acquisitions, Wall Street analysts and investment fund managers predicted at the annual Howard Weil energy investment conference. Attendance at the meeting by institutional investors and fund managers was up dramatically from past years.
NEW ORLEANS, LA., Mar. 28�The oil industry is on the verge of another dizzying round of mergers and acquisitions, Wall Street analysts and investment fund managers predicted at the annual Howard Weil energy investment conference.
Robust prices gave an air of excitement to the proceedings in New Orleans, La., with attendance by institutional investors and fund managers up dramatically from past years.
�These are the best fundamentals that I�ve seen in 30 years in the business,� William Wise, chairman, president and CEO of El Paso Energy Corp., told the group Mar. 26.
And it�s clear that major oil companies, which have spent the last decade unloading North American oil and gas properties, might want to get back in the game.
Royal Dutch/Shell Group�s attempt to buy Barrett Resources Corp. is just the beginning, analysts predicted. Barrett rejected the $55/share offer although informal talks are said to be continuing, sources said (OGJ Online, Mar. 23, 2001).
Barrett has set an Apr. 6 deadline for other companies wanting to look in their data room. Barrett rival Anadarko Petroleum Corp. has looked at the books and is itself a takeover target, although the company won�t confirm if talks are underway with a major oil firm.
Wall Street analysts said other companies believed to be under the active eye of majors include: Burlington Resources Inc., Devon Energy Corp., Evergreen Resources Inc., Forest Oil Corp., and Triton Energy Ltd.
�Barrett shows us the majors are coming back to get the properties they sold in the late 1980s,� said William Walker, president of Howard Weil, a division of Legg Mason Wood Walker Inc.
Most of these companies have aggressive gas-prone drilling programs in North America with healthy reserves that could feed electric generation demand, which is expected to remain robust the next 3-5 years.
Walker said as the industry stands now, there is room for consolidation in the independent E& P side.
�There are too many companies chasing too few projects,� he said.