OilandGasStockNews.com (OGSN) and NaturalGasStocks.com (NGS), global investor websites for the natural gas, energy and oil industries, review the recent boost in M&A activity in “Mergers and Acquisitions Continue as Companies Seek Strategic Growth and Cost Reduction within the Oil and Natural Gas Sector.” Mergers and acquisitions enable companies to increase their scale, reduce costs, as well as improve their access to capital, equipment, valuable labor and expertise, which in turn leads ideally to increased production levels. These factors have led many industry participants, from small cap to large cap, to discover growth opportunities from both inside and outside of M&A transactions as they work to increase shareholder value.
M&A activity is not new for the oil and gas industry, especially with the increased emphasis on building domestic oil and gas supplies to encourage energy independence. According to John Felmy, American Petroleum Institute’s Chief Economist, “You need to have scale to be able to bear the risks that you are going to need to be able to refine, produce, deliver etc. It also helps companies to diversify its portfolio by finding a complimentary firm and increasing overall scale.”
Recent deals such as Anadarko Petroleum Corp’s proposed $23 billion acquisition of Kerr-McGee Corporation and Western Gas Resources, Inc; as well as Energy Partners Ltd $2.2 billion agreed purchase of Stone Energy Corp, illustrate the value placed on consolidation as a key strategy for long-term growth.
Upon the announcement of Anadarko’s acquisition plan, President and CEO Jim Hackett stated, “The core assets being acquired strongly complement Anadarko’s existing properties, providing the scale and focus needed to deliver more robust, predictable and efficient growth.”
While ConocoPhillips (NYSE: COP) has significant international developments that the Houston-based company continues to expand upon through acquisitions, the Company is also heavily focused on building its domestic production. In light of Conoco’s domestic priorities, in March of this year Conoco completed its acquisition of Burlington Resources, a transaction valued at over $35 billion to help grow and strengthen the Company’s North American position.
Donald Sharpe, President of Eden Energy Corp (OTCBB: EDNE), an exploration and developer focused on large scale oil and gas projects with significant resource potential describes, “It’s not surprising to see some consolidation in our industry. Finding costs are increasing as costs for virtually all oilfield services have gone up. We have long believed that to be successful companies must build their projects internally rather than following the herd, so that land positions have been established before competition arrives. For Eden Energy, this means we have an attractive set of prospects that have large resource potential, and with success, a lot of development locations. We think that’s just the kind of assets this market will find attractive.”
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Featured Oil and Gas Portal Sponsor: (OGSN is compensated by Eden Energy as disclosed in disclaimer.)
Eden Energy Corporation (OTCBB: EDNE) has acquired 261,000 acres in Eastern Nevada. This acreage in part encompasses the Noah Oil Prospect, a giant 53 mile long, 7 mile wide linear anticline.
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Source: OilandGasStockNews.com, ConocoPhillips, Eden Energy Corp