Tuesday, February 16, 2010
Energy Company Mergers Are Expected to Rise
After two-years of few merger and acquisitions in the Energy market things look to be changing. Companies are beginning to buy new technologies and buy potential oil or gas fields. Large oil companies are looking to buy or acquire smaller faster-growing companies that will give them new fields around the world in places like Ghana, Sierra Leone, and the deep waters in the Gulf of Mexico to find potential oil. Deals have come from a regular occurrence because of America's interest in and development of technology for Natural Gas. Last year there was a total of $144 billion up from $104 billion from 2008. The future for energy companies has become eat or be eaten. “The mandate of national oil companies is to go and find reserves around the world,” said Jon McCarter, the oil and gas transactions leader for the Americas at Ernst & Young. “They have been very active and very aggressive.”
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2 comments:
I think the attitude of "eat or be eaten" sums up very well the way energy companies are currently competing. However, I think the article is short-sighted. The fact that these energy companies are becoming more aggressive is a good thing since it will increase competition and likely drive down prices for consumers. It is also consistent with what our guest speaker mentioned in class.
The drive towards the mergers and acquisitions in the oil industry in encouraging. They certainly need to increase their reserves to stay competitive with each other. The larger firms are buying big stakes in smaller energy companies to bolster their reserves and potential oil fields across the globe. As this can increase competition with new drilling concepts and technology, the threat of driving down prices can threaten the market and it may fluctuate faster than the market can handle. The mergers and acquisitions are a part of this industry for the firms and it’s good to see activity in this industry.
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