M&A pick up in the E&P sector

M&A pick up in the E&P sector

There are signs of optimism – among E&P companies, investors, financial institutions and equity analysts – around the current oil price and the timing of a future oil price recovery; a view is that the bottom has been tested, and that oil prices will recover steadily.

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We anticipate a growing consensus on the oil price developments, and we observe that the gap between buyer and seller price expectations (the bid-ask spread) is narrowing. Furthermore, we observe a number of assets on the Norwegian Continental Shelf mature for sale, and that debt and equity markets continue to be open.

In this environment, we expect to see an increase in the number of deals on the Norwegian Continental Shelf over the next twelve to eighteen months. From a valuation perspective, a key question is whether the current situation is advantageous for potential buyers to make their move: a window of opportunities to complete deals at “reasonable” valuations levels before equity markets starts to price in improved market outlooks.

KPMG Deal Advisory is a part of a network of professionals which combines global understanding and deal experience with local knowledge. Our global network allows us to mobilise international teams, who have a sense of regional market conditions and can consider local issues such as taxes and market regulations, in a timely manner. 

KPMG works with the whole E&P value chain and life cycle. Clients include oil producers such as Statoil, Shell, Wintershall and Det Norske, as well as wide range of oil service entities from rig owners to consulting and engineering companies.  Within the E&P sector we have recently been advisors on both buy and sell side transactions with deal values of multiple billion. M&A activity includes North Sea assets, Gassled assets and share transactions.

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