The oil and gas industry is gaga over dealmaking, what with capital back, oil and gas prices stabilizing and Exxon Mobil Corp. (XOM) agreeing to buy XTO Energy Inc. (XTO) in December for $41 billion.
At a Mergermarket energy M&A forum last week in Houston, there was talk of more shale gas plays like XTO, more joint ventures like Total SA's acquisition of 25% of Chesapeake Energy Corp.'s (CHK) Barnett shale assets as part of a $2.2 billion pact, and oil and oil sands transactions picking up now that oil prices are on the rise. But shale is what's driving the dealflow right now. "Gas resource plays are the flavor of the month," said Dallas Droppo, a partner at Blake Cassels & Graydon LLP in Calgary, who says Canadian companies are looking southward for deals.
Maynard Holt, co-president of upstream investment banking at Tudor Pickering Holt & Co. LLC, expects lesser-known foreign players, or what he calls "exotics," to start coming into the market next. "Outsiders are fascinated by the shale and want a piece of the pie," he said.
Sten Gustafson, a managing director at Deutsche Bank AG (NYSE:DB), expects oil services deals to also increase, with rig counts picking up and some distressed players still out there. "Nobody wants to waste a good crisis, and the capital markets are wide open," he said. "While valuations have recovered somewhat, there's still value to be had. I think we'll see M&A really soon."Mergermarket went out on a limb, putting out a top 10 target list for 2010, including Devon Energy Corp. (DVN), Range Resources Corp. (RRC), Cabot Oil & Gas Corp. (NYSE:COG), Chesapeake, Marathon Oil Corp. (MRO), Murphy Oil Corp. (MUR), Newfield Exploration Co. (NFX), Anadarko Petroleum Corp. (APC), Occidental Petroleum Corp. (OXY) and Petrohawk Energy Corp. (HK)....MORE