Over the past year, while oil prices and interest rates remain low, the oil and gas industry has been hot with M&A activity. According to recent data from Thomson Reuters, 2015 will go down as the biggest year ever for mergers and acquisitions, with an announced $4.7 trillion. An amazing number that is up 42 percent from 2014, and surpassing the previous record of $4.4 trillion in 2007.
Dr. Loren C. Scott, president of Loren C. Scott & Associates, Inc., a 34-year old economic consulting firm whose clients include such large national firms as BP, Capital One Financial, Entergy, ExxonMobil, J.P. Morgan Chase, Nucor, Sasol, Chesapeake Energy, and a diversity of others, is sensing an even greater 2016 for megadeals in oil and gas.
“What you find happening when you go into a slump like the one we are experiencing right now, is one of the ways companies deal with a downturn is these mergers and acquisitions,” Scott said. “Number one it is a way to reduce overhead costs, you don’t need two accounting departments and you don’t need two finance departments. There’s a lot of overhead savings you can have.”
Scott has seen this economic behavior before. In fact, he is one of the 32-member National Business Economic Issues Council, which meets quarterly to discuss issues of state, national, and international interest. This group has experts who cover international trade, Washington economic policy, retail trade, trucking, steel, chemicals, oil, gas and other drivers of the economy. Dr. Scott serves as an energy specialist on the NBEIC.
To read the entire column in the Bismarck Tribune’s Bakken Breakout Weekly, click here
Leave a Reply