Energy companies are facing several challenges that have stemmed from the prolonged downfall in oil prices that started mid-last year. “Energy: Turning Volatility into Opportunity,” a new report released May 6 by global valuation and corporate finance advisor Duff & Phelps and published in association with Mergermarket, underscores the impact of this decline in pricing and examines the long-term corporate finance and related implications – particularly as they relate to mergers and acquisitions (M&A) opportunities.
“While market conditions remain challenging for enterprises across virtually all sectors of the energy industry, well-positioned and opportunistic industry participants stand to benefit,” said Jim Rebello, managing director of Energy M&A for Duff & Phelps. “Prices for energy-related assets have been reduced indiscriminately, and we believe (and the data underscores) that both strategic and financial buyers will be active in the months ahead.”
With the industry landscape in mind, Mergermarket spoke to a number of executives across the oil and gas sector about the implications of the downturn to date, as well as the longer-term opportunities. In the report, the executives discuss what they have learned from this and other market downturns, including the importance of portfolio diversity, balance sheet strength, and building reserves to be able to pursue growth opportunities as they emerge.
Specifically, the report covers how exploration and production (E&P) executives potentially see an activity surge as new drilling products are developed and companies begin to increase their search for oil and gas. It discusses how oilfield services companies are principally focused on balance sheet management, but expect opportunities for the segment to expand geographically and in terms of service lines. The report also covers how, though the midstream segment remains relatively unscathed because lenders are still open to extending credit to these companies, these firms have yet to reassess their growth strategies.
Duff & Phelps is a global valuation and corporate finance advisor with regard to complex valuation, dispute and legal management consulting, M&A, restructuring, and governance and regulatory consulting.
Mergermarket provides forward-looking M&A news and intelligence for M&A professionals and corporate entities. Mergermarket is part of The Mergermarket Group.