The M&A market in oilfield services ground to a virtual halt in Q3, its slowest in deal value in at least five years, according to the Enverus Drillinginfo M&A Database. Combined, the entire sector produced only $2.53 billion in combined deal value in Q3—less than Transocean’s acquisition of OceanRig UDW in September 2018. All of 2019 has produced only $10.35 billion in announced deals compared with $13.24 billion in 4Q18. Crude’s rally in early 2018 followed by the 4Q18 price collapse could share some of the blame for the transaction stagnation. The sharp decline prompted E&P firms to cut back their production or do more for less capex. This trickled down into OFS, which has felt investor pressure. From North American frackers to offshore drillers, many oilfield services segments complain of oversupply. While consolidation would be one way to reduce pricing pressure, investors could be reluctant to endorse larger companies. In fact, the two largest M&A transactions in the past 10 years are in the process of being undone. General Electric started eyeing the exit almost as soon as the $33.9 billion merger of GE Oil & Gas and Baker Hughes closed in July 2017. GE finally reduced its stake… continue reading
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Source: CTRM Center