Oil And Gas M&a Picks Up As North America Proves An Attractive Prospect

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M&A activity in the oil and gas industry has picked up considerably in North America, with the trend likely to continue as Asia gains more appetite for resources.

The oil and gas industry is complex, and demand for fossil fuels is influenced by a number of factors, such as geopolitical variables, regulatory pressures, price fluctuations and climate change issues. One aspect that is certain, however, is that demand for resources is growing in emerging economies such as China and India.

Alongside this has come an increase in firms merging with and buying North American gas and oil businesses. Statistics from Dealogic show that some $297 billion worth of oil and gas M&A deals have taken place so far this year. This is already more in value terms than the $273 billion in deals completed during the whole of 2011.

One of the most recent has been Exxon Mobils $3 billion deal to Celtic Exploration, a Calgary-based LNG firm. In fact, LNG businesses have proven the most popular in Canada, with three of the five largest deals in the country this year involving natural gas assets, with a total value of $9.8 billion.

The increase in M&A activity in the industry is set for further growth, according to a recent survey by Ernst & Young. It found that 84 per cent of industry insiders questioned expected more activity in the oil field services sector. At the same time, almost three in four of them said they will be looking to make acquisitions in the sector themselves over the coming year or two.

Despite the busy M&A market, it remains difficult to carry out deals in the oil and gas industry due to the fact that it is so heavily regulated and such a fast-changing, dynamic market. Traditional due diligence is unlikely, as a result, to be able to deliver all the information dealmakers need to ensure they are making the right decision. With growing interest from Asian buyers in North American gas and oil assets, this has rarely ever been more of a challenge, as cultural issues can also get in the way of a successful merger or sale.

Taking an issues-based approach to due diligence can help when undertaking oil and gas M&A activity. This all begins with establishing the major business area that will need examining and checking before a deal is signed off. While most due diligence processes take an approach that is more focused on the financial attributes of a potential target, an issues-based, approach is more relevant in this sector.

Although the future looks bright for oil and gas M&A, some onlookers are concerned about Canadas recent decision to reject attempts from Malaysian state-owned oil firm Petronas to buy Progress Energy Resources for $5 billion. All eyes are now on Ottawa to see if it approves the even bigger $15 billion bid from China's Cnooc to take over Canadas Nexen. If this deal does pass through the regulators, the floodgates for more Asian takeover of North American oil and gas assets could open even wider.

About Merrill DataSite

Merrill DataSite is a secure virtual data room (VDR) solution that optimizes the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSites multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.

With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organization-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration the highest standard for information security and is currently the worlds only VDR certified for operations in the United States, Europe and Asia.

As the leading provider of VDR solutions, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence on thousands of transaction totaling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions. Learn more by visiting http://www.datasite.com today!

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by: Alex

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