Oil and gas capital confidence barometer

Merger and acquisitions outlook

  • Share

Despite the relatively low levels of M&A activity that has characterized the last year, the oil and gas sector is broadly optimistic that deal activity will increase.

Oil and gas companies have become more measured and cautious in their approach to M&A, but this action currently manifests itself via pricing rather than volumes.

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EY chart on pursuing acquisitions, 2014

Other trends we observe include:

  • Decreases in confidence underpin the loss of appetite
  • Deal volumes are expected to increase
  • Current deal pipeline is rather limited, but is expected to grow
  • Funding availability and the broader business environment were the big deterrents to acquisitions
  • Market share objectives driving acquisitions
  • Bolt-on acquisitions favored over transformative deals
  • Pricing divergence reflects valuation uncertainty
  • Valuation gaps expected to narrow
  • Acquisition capital largely headed to emerging markets
  • Unforeseen liabilities as biggest threat to deal expectations