The oil and gas industry is set for a year of mergers and takeovers as a result of the plummeting oil price, a business consultancy has warned.
The UK based firm PwC said that rapid rebound like the one in 2009 is not very likely as many assume crude could trade low for much of 2015.
The oil price fell from $115 a barrel in June to below $60, hitting a new five-and-a-half-year low last week.
PwC said “uncertain times” were approaching for the 440,000 people employed in the UK’s oil and gas sector in what could be the first hostile takeover in living memory.
Drew Stevenson, PwC’s UK energy deals leader, said: “Oil prices remaining at the current level for a sustained period will light the touch-paper for mergers and acquisitions in 2015.
“As the UK industry positions itself for a more uncertain future, we expect to see deal activity levels pick up throughout the year ahead.”
The consultancy noted that the industry would be “increasingly cash-constrained” with new debt coming at a cost, and existing debt coming under increased scrutiny.
PwC’s top five predictions for 2015:
• more distress sales and opportunistic public bids for companies with good underlying assets but the wrong financing structure;
• increasingly cash-constrained oil and gas industry in its current form throughout the new financial year;
• rising inbound investments as cash-rich institutional and private investors look for bargains;
• businesses will watch out for the impact of reduced gross assets in the first quarter of 2015;
• more large mergers and acquisitions- a trend that could accelerate as the year goes on.
