According to HIS, Inc., 2014 was a strong year for M&A activity in the oil and gas sector, with an overall deal value increase of 23% over 2013. This year-over-year increase is all the more impressive given that transactions slowed down considerably in the last two months of the year – coinciding with the precipitous drop in oil prices.
This observation, and the continuing drop in prices, begs the question of what M&A activity will look like in 2015. Some seem to believe that these lower prices foretell a series of fire sales as leveraged companies suffer, and those with cash and staying power look to pick up bargains. Others note that deals are difficult to consummate until the market sets a price range that both buyers and sellers can agree upon. Until there is some additional clarity on whether prices are headed – not only where the bottom will be found, but also if and when prices will rise, and if so how fast – transactions are going to be hard to complete.
These are uncertain times indeed. Don't expect clarity to be found any time soon.
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