Oil price volatility presents acquisition opportunities for industry Majors, says KPMG

Oil price volatility presents acquisition opportu...

Anthony Lobo, UK Head of Oil & Gas at KPMG, comments on the latest report from the Organisation of the Petroleum Exporting Countries (OPEC).

Also on KPMG.com

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  • Majors watching corporate acquisition targets, as many share prices hit 12 month low

Commenting on the latest report from the Organisation of the Petroleum Exporting Countries (OPEC), which has downgraded the forecast demand for OPEC crude oil from 29.3m barrels per day (b/d) to 28.9m b/d in 2015, Anthony Lobo, UK Head of Oil & Gas at KPMG says:

“This downgrade in demand, from 29.2m b/d issued in November to 28.9m b/d yesterday, represents a significant reduction given the decision to maintain production.

“By not cutting production in order to protect market share, OPEC will continue to fuel lower crude prices and it’s now at mercy of US shale oil producers until 5th June 2015 when the next OPEC meeting takes place – unless they hold an emergency meeting in the new year.

“The latest fall in the price of Brent crude oil below US$65 has left many in the industry struggling to adjust to a new dawn of low prices, falling demand and oversupply.”

Emma Wild, head of upstream advisory at KPMG added, “The oil industry is rapidly trying to adjust to the newly volatile oil prices. Restructuring, slashed capital expenditure and delayed exploration have all been announced, as the big players seek to maintain cash flows to cover dividends and smaller companies struggle to access new debt‎.

“Majors with the courage and a long-term view, could run a slide rule over corporate acquisition targets, as share prices have been at their lowest in the past year. While many majors are already looking, the question is who will be first to move.”

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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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