Consolidations, Mergers Expected to Continue
Consolidation hasn't stopped and, in fact, will play a big role
in the future for both large and small players in the oil and gas
industry, said David Moore, a strategic practices consultant for
Moore told the Society of Petroleum Engineers in Dallas last
week that because as a whole, the energy industry has not done a
good job of keeping up with the marketplace in terms of shareholder
value, it has been under "relentless" pressure to create new value.
Pointing to the "mega mergers" of BP with Amoco and Arco, as well
as Exxon's with Mobil, Moore said that while he believes the
industry has seen the "last wave" of mega mergers, more will come
for smaller companies, and different types of partnerships will
emerge in the future.
"We'll continue to see the consolidation of smaller majors and
more independents," Moore predicted. "But we'll also see more
portfolios restructured and more collaboration." Using what he said
would be "co" mergers, Moore said more oil and gas companies will
be combining to achieve shareholder value; consolidating their
talents; co-locating to work on larger more complex projects;
collaboration to streamline projects; cooperation to share talent
and resources; and co-acting to build new things.
"We're driving toward what I call network centric, which
involves more alliances and interaction. No longer will it be an 'I
win, you lose,' scenario, but more of a 'we win' with more cross
Because of the Internet, Moore said there will be more synthetic
mergers, or mergers that don't necessarily combine monetary assets,
but rather, intellectual and resource assets. More specialists are
expected to emerge, as more companies outsource their services to
rely on others to do things they don't do in house. And with the
new types of mergers, Moore said that the leading companies would
push to give more business to specialists.
"We'll see more redefinition of the core business," said Moore,
and more companies will redefine their portfolios to manage at
Carolyn Davis, Houston
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