Blakes: M&A activity in oil and gas increasing
EXECUTIVES BULLISH ON PROSPECTS FOR M&A ACTIVITY
IN CANADA’S OIL AND GAS INDUSTRY
CALGARY, ALBERTA – Mergers and acquisitions (M&A) activity in oil and gas is set for a steady increase in Canada over the next 12 months, according to a study released by Blake, Cassels & Graydon LLP (Blakes), a Canadian-based international business law firm. The study, undertaken for Blakes by mergermarket, found that 79 per cent of respondents expect deal volume to increase in 2011, and 70 per cent expect to see an increase in the value of M&A transactions. The study is based on interviews with over 100 corporate executives and investment bankers with recent Canadian oil and gas M&A experience, to gain their perspectives on trends for the industry in 2011.
“We are seeing confidence in oil patch investment driven primarily by improved economic conditions and increased interest by Asian participants,” said Michael Laffin, a Blakes Partner in Calgary. “Given Asia’s interest in Canadian resources, Canadian companies and government should consider the best method for developing strategic relationships with Asian interests. We must be cognizant that Asian companies view resources on a global scale, and if Canadian governments and companies cannot respond to their needs, other countries will.”
“Renewed interest in oil sands, and the development of shale gas and tight oil resource plays driven by new technologies like hydraulic fracturing, is essential to North American energy independence,” said Dallas Droppo, a Blakes Partner in Calgary. ”Forty-three per cent of respondents believe this will be critical in shaping the industry over the next decade. Many see energy independence, political factors and sustainability initiatives as very much intertwined.”
Pointing to a potential difference in outlook for the industry outside of the United States, three-quarters of respondents say Canada’s oil and gas industry will not be affected by the American Clean Energy and Security Act of 2009 or other U.S. climate change initiatives. In fact, while climate change issues have led to greater scrutiny of the industry and interest in developing alternatives, most respondents believe that Canada’s oil and gas industry will remain unaffected by renewable energy developments.
China’s need for natural resources will continue to propel acquisition activity. Over half of respondents expect most inbound oil and gas M&A activity in Canada to come from the Asia-Pacific region, followed by over a third who expect U.S.-based acquirers to be most active.
Looking outward, 41 per cent expect Canadian acquirers to focus primarily on the U.S., while 38 per cent said Latin America would be the target. “There has been a lot of press about foreign energy companies coming into Canada, but there’s also a good story about Canadian companies participating in plays all over the world,” said Mungo Hardwicke-Brown, a Blakes Partner in Calgary. “There is a tremendous amount of oil and gas operational expertise in Canada that is being exported all over the world.”
About Blake, Cassels & Graydon LLP
At Blake, Cassels & Graydon LLP, we serve a diverse national and international client base, and our integrated office network provides clients with access to the Firm’s full spectrum of capabilities in virtually every area of business law. Blakes has offices across Canada and in New York, Chicago, London, Bahrain, Beijing and associated offices in Al-Khobar and Shanghai. In 2010, and for the third consecutive year, Blakes was named “Canada’s Law Firm of the Year” by Who’s Who Legal and “Law Firm of the Year: Canada” in the PLC Which Lawyer? Awards. For the last four years, Blakes was the busiest Canadian M&A law firm, according to Bloomberg, mergermarket and Thomson Reuters league tables. More information on Blakes is available by visiting the Firm’s website at www.blakes.com or by following us on Twitter @BlakesLaw.
mergermarket is an independent M&A intelligence service, with the largest network of dedicated M&A journalists on the ground in 65 locations across the Americas, Asia-Pacific, Europe, the Middle East and Africa. This team focuses on gathering actionable proprietary intelligence, creating the only origination database of live targets and bidders.mergermarket is also an unrivalled source of deal history. Public and private deals across a range of sectors can be searched using an exhaustive database. This proprietary intelligence and historical deals database is available to over 145,000 individual subscribers from more than 1,600 of the world’s principal advisory firms, investment banks, law firms, private equity firms and corporates. mergermarket is part of The Mergermarket Group, which has over 600 employees worldwide and regional head offices in London, New York and Hong Kong.
An electronic version of the study is available at:http://blakes.com/pdf/mergermarket/Canadian%20Oil%20and%20Gas_v18_HWGC.pdf
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