Pace of E&P Acquisitions, Upstream Investment Expected to Pick Up

With so much money on the table and no other logical outcome, the pace of mergers and acquisitions among oil and natural gas companies will pick up again this year, and capital investment in the upstream sector will grow by at least 25%, according to a new report by energy research firm John S. Herold Inc.

On the other hand, oil and gas reserves developed with relatively low technical risk, such as oil sands and tight gas reservoirs, “are particularly desirable now that capital is abundant and prices are expected to remain lofty. Companies of this sort are the opposite of prospect constrained. [Calgary-based] Suncor Energy has exploited its synthetic oil mine niche for over 10 years, and [Houston-based] Burlington Resources’ asset base prompted ConocoPhillips’ acquisition bid” (see Daily GPI, Dec. 14, 2005).

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