Upstream M&A in Holding Pattern as’Picky,Grumpy’Investors Shun Market

摘要

That”giant sucking sound”heard throughout the upstream space is capital leaving the sector and forcing a reset of mergers and acquisition(M&A)activity,two market experts said last week.Burned by the upstream sector's tendency to burn through cash for growth,investors largely fled the space two years ago,telling producers,”The gig is up,”said Bill Marko,managing director at Jefferies.Marko and Credit Suisse's Houston managing director Randy Bayless said a new normal that has taken hold in which M&A is harder to accomplish but very much needed.They were speaking at the Texas Independent Producers and Royalty Owners’summer conference in San Antonio.From a peak of $32 billion in the third quarter of 2018,M&A in the first quarter of 2019 plummeted to $4 billion,and half of that was from a deal Brazil's Petrobras struck in the Gulf of Mexico.For small-cap companies that desperately need scale to compete,the situation is critical,Marko said.