M&As are back as oil industry shifts from survival to growth
HOUSTON (Bloomberg) -- Multi-billion-dollar oil and gas deals are back on the table.
More than $11 billion of transactions were announced globally in July as crude’s recovery fueled hopes of a steadier market, Wood Mackenzie said. That’s the highest monthly total this year and brings the amount since May to $32 billion, triple that of the previous three months. Deal-making will continue to accelerate as oil prices stabilize, according to the consulting firm.
Exxon Mobil and Statoil were among the buyers after crude’s rebound from a 12-year low earlier this year bolstered confidence. Acquisitions will allow the companies to ensure future growth as the industry has slashed $1 trillion in spending to protect their balance sheets during the downturn.
“The extreme oil price volatility in the first quarter caused a lot of uncertainty,” said Greig Aitken, principal analyst for mergers and acquisitions at Wood Mackenzie. “Activity picked up as confidence returned and companies started looking towards future growth instead of focusing entirely on survival.”
Exxon, the world’s largest oil producer by market value, agreed last month to acquire natural-gas explorer InterOil Corp. for as much as $3.6 billion to add discoveries in Papua New Guinea. The company also is in advanced negotiations with Eni to buy a stake in gas finds off Mozambique, people with knowledge of the talks said in July.
Statoil, Norway’s biggest oil producer, agreed last month to purchase an oil block off Brazil from Petroleo Brasileiro for $2.5 billion, its biggest acquisition since 2011.