Only four months of 2014 have passed, but energy mergers and acquisitions have managed to reach their highest levels in the past decade. Factor in the remaining eight months, and the levels are expected to rise even higher and break records set in the past. Most of the mergers that took place were based in Houston, but the same effect has been noted across the nation.
So why have M&A activity levels suddenly risen in the energy sector? The boom of shale oil is probably the primary reason. Since shale oil presents many opportunistic endeavors, many energy companies have turned their attention towards it and are keen to invest significant amounts. The bigger names in the industry want to step ahead in the race, and in order to fulfill this goal, they are busy acquiring smaller companies.
The above findings have been summarized in a report, which has been prepared by a reputed law firm. In the analysis presented, increased interest of the bigger enterprises and more foreign investors have been quoted as the primary reasons of more mergers taking place.
Considering the first quarter of 2014, there were over 40 deals that were finalized. All of them had a value that was more than $50 million, and the total worth of all the deals was $19.8 billion. Among these 12 deals, foreign buyers were involved and were valued at $8.3 billion.
Compared to this, 2013 saw reduced activity levels in the first quarter with only 41 deals being made that had a lower net worth. However, the last quarter of 2013 saw higher activity levels that were in fact also higher than the ones recorded in the first quarter of this year. This is because there is often more activity towards the end of a year. Industry experts are hopeful that the end of 2014 will beat all past levels.
An expert in the oil and gas sector told the press that various trends can be noted among the companies. While some of them have chosen to focus on domestic shale, others have preferred to take a step back because they fear they do not have the ace cards. All these companies have sold their shale assets. The professional added that he was hopeful to see increased activity, the major players of which will be oilfield services.