Oil Deals Surging Again with Multimillion Dollar Deals

Published By : 18 Mar 2014 | Published By : QYRESEARCH

Merger and acquisition activity in the oil segment seems to have picked up again after a recent lull. Among the most notable financings and acquisitions is the announcement by Whitecap Resources Inc to buy Imperial Oil Ltd’s gas properties and Western Canadian oil. The former is spending as much as USD 855 million to see these deals through. 

The deal, which was made on Monday, has taken the total value of M&As in the sector in the first quarter alone to USD 7 billion. This is nearly ten times that of the same period last year, according to figures stated by Sayer Energy Advisors.

According to industry analysts, the major reason for an increase in the M&A activity is the increasingly optimistic outlook towards the Canadian natural gas and oil sector, after extreme dips in the temperature this year that led to wider demand for heating. 

At the same time, it is important to note that this year last time the industry was weighed down by the depressed gas markets. These problems were only compounded by the deep discounts for Alberta oil that impacted the industry in a not-so-favorable manner. The discount that was primarily caused by bottlenecks in transportation has been mitigated to a great extent as more and more companies use alternative means of transportation. The opening up of new pipeline capacity has also helped the market show better earnings.

At the same time, there has been encouraging activity in the equity financing sector. Whitecap, a relatively new entrant in the small energy producers segment, recently announced that it had issued USD 500 million as subscription receipts towards funding for its acquisition. 

Overall, investor sentiment in the sector remains positive and players are now willing to invest more capital in this sector, opine industry analysts. 

Another deal that made headlines was that of Caracal Energy Inc, a firm operating in Chad. Caracal’s USD 700 million purchase of TransGlobe Energy Corp as a step towards expanding its Egypt holdings is being looked at as a positive indicator for the industry.

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