PricewaterhouseCoopers Sees M&A Activity Picking Up Speed

Consolidation in the energy industry in North America is expected to accelerate in the second half of 2001, particularly among independents oil and gas producers, according to the energy mergers and acquisitions team at PricewaterhouseCoopers. But acquirers run the risk of overpaying at what may be the high end of the pricing cycle.

"We're in a unique period for the industry in that commodity prices have been extremely high although gas has come off a little in the last few weeks. But the equity markets of the energy companies have not been there," said Rick Roberge, a partner in the Transaction Services group at PricewaterhouseCoopers. "I think what you are seeing, particularly with the intermediates--the super independents, if you will--is an opportunity to get bigger and acquire an inventory of projects.

"For the smaller companies it's just a time to cash up, but the bigger companies are really looking at larger projects. Many are doing deals in Canada and the Rockies. The Canadian dollar remains weak, and the Canadian stocks have been priced lower than the U.S. stocks, the multiples have been better. There are large natural gas opportunities in Canada," he noted. While the Gulf is in decline except for the deep water, there are still 1 Tcf fields available in the Rockies and Canada. "I think that is where we will see the most activity," said Roberge.

"I think there will be an increase in the number of transactions this year but in terms of dollar value it will be hard to surpass the big deals last year. We already have quite a few, though, with the Williams-Barrett deal, Anadarko-Berkley and Chevron-Texaco. At the top level, there really aren't many deals left. The majors are going to focus more on large international projects. The large and mid-sized independents, though, will continue to do acquisitions. It's a cheaper way to add to your reserve base."

The Transaction Services group of PricewaterhouseCoopers ( offers a deal process that helps clients bid, close and realize profits on mergers, acquisitions, sales and financing transactions. PricewaterhouseCoopers is the world's largest professional services organization.

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