According to some commentators, ongoing volatility in oil prices may result in increased M&A activity in the Canadian oilpatch. As recently reported in the Financial Post, John Chambers, CEO of Calgary-based investment boutique FirstEnergy Capital Corp., believes a revaluation of assets in the oil and gas sector may attract cross-border M&A activity from oil majors who may use the “once in a very long time opportunity” to make acquisitions. If this view is correct, then the recent acquisition of Talisman Energy Inc. by Spain’s Repsol SA for $8.3 billion may be a sign of things to come.
Mr. Chambers isn’t alone in thinking that 2015 could be a banner year for M&A activity in Canada’s oilpatch. As recently discussed in the Financial Post, 2014 was a record year for M&A activity in the Canadian oilpatch and continuing low commodity prices may further encourage acquisitions of attractive assets by companies with strong balance sheets. As well and as discussed in our recent blog post titled Positive outlook for Canadian M&A despite market volatility, a recent study commissioned by Citi has also concluded a positive outlook for Canadian M&A in 2015, particularly in the energy and consumer sectors.
The upshot is that, in the struggle to adapt to continuing volatility, companies and market players may find greater opportunities for transformative dealmaking that were previously unavailable.