The majority of senior oil & gas executives (78%) are taking a cautious response to recent market changes. While just a fifth (22%) are prepared to adopt an aggressive or opportunistic stance, according to research by global law firm Clyde & Co.

Oil & gas companies have made concerted efforts to cut costs in order to shore up profitability; eliminating thousands of jobs and deferring or cancelling billions of dollars' worth of projects. However, the wave of M&A activity, predicted by many industry experts, has yet to begin.

Clyde & Co says that, among other factors, the cautious approach being taken by such a high proportion of senior oil & gas executives may be delaying M&A activity in the energy sector.

Philip Mace, Corporate Partner at Clyde & Co, comments: "The fact that four fifths of businesses are still taking a cautious approach to market changes could mean the so called 'inevitable' wave of M&A activity is not quite round the corner. Businesses are clearly still assessing their options in order to make a more calculated approach to M&A."

He adds: "There are still several obstacles blocking M&A activity; volatility in the oil price is the main one. When the price has shifted so significantly, and predictions about the future vary widely, it is often difficult for sellers and buyers to agree on suitable valuations."

Clyde & Co's research also reveals that appetite amongst senior oil & gas executives for strategic business growth or acquisition opportunities is currently greater than the motivation to divest assets – 45% compared to 31% (see full table of responses below).

These figures suggest that many businesses are planning a tactical approach to invest in future growth at attractive prices, but many potential sellers may still be delaying disposal decisions.

Earlier this year industry experts predicted that if oil prices were to remain below $35 a barrel, sellers could come under pressure to try and strike deals. The recent rebound in the oil price to around the $40 mark may well prove to be a factor for oil & gas companies to continue to bide their time.

Restructuring entire businesses and asset portfolios is this year's top priority

The one strategy senior oil & gas executives would drive as a priority for the next twelve months is restructuring entire businesses and asset portfolios, according to Clyde & Co.

Almost a third (32%) of the senior oil & gas executives that were surveyed chose restructuring entire businesses and asset portfolios as their top priority for the year.

The impact of volatility in the oil price has exerted enormous downward pressure on profitability across the sector and forced oil & gas businesses to place restructuring on the top of their agenda.

Philip Mace comments: "For many oil & gas companies, large and small, access to capital in the current market is extremely tight. Consequently, streamlining operations, focusing on core business and dealing with unprofitable areas are vital."

Focus on smaller and more flexible capital-light projects was the next most popular choice, with 21% of oil & gas executives choosing this as the one strategy they would drive as a priority.

The more flexible and capital-light projects, allow energy companies to reduce their overheads whilst still focusing on growth. Investing in more expensive long term projects carries a greater risk, especially as oil price volatility continues, explains Clyde & Co.

Entry into new growth markets was third on the list, with 15% of respondents placing this as their top priority.

Given current market conditions, entry into new markets may be out of reach for many companies where budgets are tight and CAPEX decisions are on hold.

"For a small minority of better-resourced, more agile IOCs or NOCs, taking a pro-active approach to increasing penetration of growth markets now makes sense, to take advantage of cheaper assets or to fill gaps left by others as they retreat," comments Philip Mace.

The survey respondents included a cross section of senior oil and gas executives from the global energy market. The respondents are based in the UK, Europe, the Middle East, Russia, Asia, Africa, South America and North America.