Merger and finance activity in the oil and gas industry has been tricky to predict, given its economic fluctuations in recent years. A slate of speakers last week, however, delivered insights on the fickle world of energy M&A and financing from a variety of angles.
Energy sector players gathered Tuesday at the Four Seasons in downtown Denver for the 6th Annual Energy M&A and Financing Forum. Davis Graham & Stubbs presented the event, which featured DGS attorneys and industry executives. From market outlooks in oil and gas to reviews of rules and regulations, the overall tone among speakers was one of positivity tinged with conservatism.
Keynote speaker Andrew Byrne, director of equity research at IHS Markit, opined on the emerging patterns of oil and natural gas pricing as it has affected — and might continue to affect — decision-making among upstream oil and gas companies. While he noted “a strong outlook on oil demand,” his was a message of “cautious optimism” amid changing norms of recent years.
The energy industry resigned itself to a new normal of consistently lower oil prices per barrel, or the “50 Forever” concept, Byrne said. But those prices have begun rallying upward of $60 in recent months in what many analysts consider a short-term aberration of lower inventory, he added. That spike can create a challenge for M&A deals, he said, because the buyer is going to want to value the oil assets based on a $50 to $55 price per barrel, but the seller will want to use the higher price point.