In the current economic climate Deloitte believes there are opportunities for cash-rich oil and gas companies to acquire smaller independent oil and gas companies with attractive portfolios but capital-constrained balance sheets.

Rajeev Chopra, head of energy, infrastructure and utilities in corporate finance at Deloitte said: “With valuations becoming more realistic as management teams accept a lower oil price environment, those International and National Oil Companies (NOCs) with a war chest are well positioned for M&A activity.  Smaller independent oil and gas companies will be particularly vulnerable if they are highly leveraged or rely on the equity markets to complete their drilling commitments.  The AIM Oil and Gas index has already fallen by over 60% - three times the rate of the FTSE and the last three months has seen the market for smaller exploration and production companies tumble by 50%.”

Ian Sperling-Tyler, oil & gas director in Deloitte’s transaction services team adds: “There are a wealth of opportunities to be had for the right investor.  All the deal drivers are in place, and as buyer and seller expectations become aligned, companies will begin to take a strategic view, particularly NOCs from China and India looking to bolster both reserves and technical expertise, and supermajors seeking to acquire material reserves through M&A.”

Ends

Notes to editors
Research is based on Deloitte analysis of Datastream figures.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.