Doubling of oil price catalyst for new investment | KPMG | UK
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Year-on-year doubling of oil price provides catalyst for new investment, says KPMG

Doubling of oil price catalyst for new investment

KPMG comments on the outlook for 2017 after a challenging 2016.


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Mark Andrews, UK Head of Oil & Gas at KPMG says:

“The industry has come a long way since the low of US$27 oil on 20th January 2016. After a year of rebasing of costs, restructuring balance sheets and optimising capital allocation, 2017 has started on a much more positive footing. With OPEC (Organization of the Petroleum Exporting Countries) and Russia appearing to adhere to their production cut agreement, and capital beginning to be deployed for deals, many are hoping the industry has turned a corner.

“Much will hinge on the continued stability of the oil price. The industry seems to have settled on US$50 oil as the medium-term outlook, and has cut its cloth accordingly.  However, with OPEC already suggesting six months of production cuts may be sufficient, the supply side still has the potential to send oil prices, and sentiment, lower. 

“That said, the industry has learned lessons of the past and is better prepared. Price risk will be the principal focus when investing, lending, and allocating capital, with breakeven thresholds a critical element for all.

“From an M&A perspective, much has been made of the “dry powder” of Private Equity. The ongoing desire of the Oil Majors and Utilities to refocus on core operations is seen by many as the primary catalyst for deal flow. Should the oil price remain stable, this is something to watch as valuing assets should become easier and less contentious.”


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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff.  The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 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. 

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