Deloitte 2011 Oil & Gas M&a Outlook

8/3/2019 Deloitte 2011 Oil & Gas M&a Outlook

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Oil & Gas Mergers and AcquisitionsA lot o talk, much more action

Deloitte Center or Energy Solutions

Oil & Gas Mergers and Acquisitions Report

Year-end 2010 and 2011 Outlook


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Table o contents

Introduction by Deloittes Vice Chairman, Oil & Gas 1

Industry Overview 2

Exploration & Production 4

Midstream 6

Oilfeld Equipment & Services 8

Refning & Marketing 10

Summary 13

2

Source: IHS Herold

Table o contents

Strong recovery in mergers and acquisitions expected to continue 1

Industry Overview 2

Exploration & Production 4

Midstream 6

Oilfeld Equipment & Services 8

Refning & Marketing 10

Summary 13
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Strong recovery in mergers andacquisitions expected to continue

As used in this document, Deloitte means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory

Services LLP. These entities are separate subsidiaries o Deloitte LLP. Please see www.deloitte.com/us/about or a detailed description o the

legal structure o Deloitte LLP and its subsidiaries.

The year 2011 is shaping up to be a very strong one or

energy industry deal-making activity. The recovery in

mergers and acquisitions (M&A) that we began to see

in the rst hal o 2010 continued throughout the year,

driving deal count and value back to pre-recession levels.

Underpinning this renewed interest in energy assets has

been the strength in commodities markets. We expect that

trend to continue, which will mean greater deal activity in

oil and gas, particularly in the exploration and production(E&P) segment o the industry.

Right now, North America remains the center o E&P

transaction activity, as domestic and international buyers

o all types continue to be drawn to unconventional

assets. The openness o the North American markets to

outside investment and the long-term potential o the

regions shale and oil sands elds attract investors despite

recent weakness in natural gas prices. Looking ahead, we

anticipate an active transaction market to continue

as stronger players, searching or reserve replacement and

technological expertise, nd buying opportunities among

smaller companies unable to ride out the weak market ornatural gas.

While E&P activity in the Gul o Mexico in 2010 continued

to be troubled by a cloudy regulatory outlook, buyers,

particularly rom China, were actively snapping up

deepwater assets in South America. Just as technological

innovation has opened up vast resources to development

in North America, technological advancements have

helped uel deepwater deal activity, and we expect

deepwater reserves to be an area o continued excitement

and buying interest in 2011.

Midstream transaction activity has picked up, and we

expect it will continue to be strong through 2011.

Companies are ocusing on extending their geographical

reach and building up inrastructure to serve the new

unconventional sources o gas supply. That should

translate into continued consolidation as midstream

providers increase their capacity to make new

investments. The same drive to serve the high-potential

unconventional and deepwater markets ueled some very

large transactions in the oileld services segment in 2010.

While the largest deals may have already taken place,

oileld service is expected to continue to be an active area

or deals in 2011 as large oileld service players continue

to seek access to cutting-edge technologies and newmarkets.

Reneries improved their protability in 2010, but

overcapacity continues to be a drag on asset valuations

in this segment. Private equity players and international

buyers attracted to depressed prices may make some

strategic acquisitions in this area, but overall M&A activity

in 2011 is likely to lag behind other, stronger segments o

the oil and gas industry.

Our M&A 2010 Review and 2011 Outlook contains more

inormation about the past years deal-making activity

and prospects or 2011 in each energy industry segment.Deloittes M&A leaders also weigh in with insights on

underlying undamentals, areas o particular strength and

weakness, and exciting trends that will shape transaction

activity in the uture.

Gary Adams

Vice Chairman

U.S. Oil & Gas

Deloitte LLP

M&A 2010 Review and 2011 Outlook 1


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Industry overviewA broad recovery in transactions topre-recession levels

The long-term potential o unconventional and deepwater

energy assets attracted buyers o every sort back into the oil

and gas M&A market in 2010, pushing the overall industry

deal count to pre-recession levels. Merger and acquisition

activity continues to recover rom the low point reached in

the ourth quarter o 2008 through the rst hal o 2009,

says Jim Dillavou, partner at Deloitte & Touche LLP. Since

then, transactions have been strong and they continue on

an even keel.

A recovering worldwide economy supports the industrys

strong deal activity, as ears o a double-dip recession

have aded. Stronger commodity prices and credit markets

urther support continued M&A activity. Were seeing a

handul o new transactions each day, and plenty o money

is still on the sidelines, says Jed Shreve, principal at Deloitte

Financial Advisory Services LLP. Private equity players and

the large corporations have plenty o cash or deals.

Financials and undamentals within the industry are

particularly strong, thanks to rising oil prices. Right now,

weve got oil prices in the $100 range, and that priceseems very real, with a strong foor under it, says Dillavou.

North American gas is a dierent story, where prices have

weakened due to successul drilling programs. However,

that is not stopping the major oil and gas companies rom

snapping up North American gas assets to urther diversiy

their energy portolios. Making investments when prices

are low is a good strategy, says Trevear Thomas, principal

at Deloitte Consulting LLP. These players are in it or the

long haul.

Buyers include super majors looking or high-potential

assets, the Chinese and other international players, and

private equity unds. The Chinese oil and investment

companies are making long-term investments in North

America, particularly in Canada, says Dillavou, and they

are pursuing oil and gas resources in practically all corners

o the world. Chinese acquisitions o deepwater assets in

Brazil and conventional mature assets in Argentina led

to a jump o nearly 350% in transaction value in

South America. While the majors and National Oil

Companies (NOCs) are ocused on resources, private equity

investors remain active in all segments o the industry,

including transportation, storage, processing, and

other inrastructure.

Note: M&A activity examined in

this report represents mergers

and acquisitions involving oil

and gas companies between

rst quarter 2008 and ourth

quarter 2010 with values greater

than $10 million, including

transactions with no disclosures

on reserves and/or production.

Deloittes methodology takes

a deeper look into the M&A

transaction data. Our analysis

has excluded several transactions

between aliated companies to

provide a more accurate picture

o M&A activity in the sector.

2

Source: IHS Herold


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Overall, deal count in the industry rose 12% in 2010 to

443, while value increased 25% to $227 billion. M&A

activity was concentrated in E&P, with acquisitions in North

American shale and oil sands assets leading the way. North

Americas deal count share rose rom 54% to 68% o the

worldwide total.

Shreve marvels at how domestic industry prospects

have changed in just a ew years. New exploration andrecovery technologies have opened up vast unconventional

resources to production in the U.S., transorming the

industrys transaction market and investment plans. Its

interesting how, about ten years ago, more than 30 liquid

natural gas (LNG) regasication import terminals were

proposed or construction in this country, as we were

running out o natural gas supplies. Now, discussions are

taking place to build liqueaction plants to export natural

gas out o the U.S. Thats a 180 degree transormation in

a decade.

Were seeing a handul o new transactionseach day, and plenty o money is still on thesidelines.

Jed Shreve

Principal

Deloitte Financial Advisory Services LLP

Oil & Gas M&A deals by value and count

0

10

20

30

40

50

60

70

80

0

50

100

150

200

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

Asset value Corporate value Total deal count (RHS)

(In $ billions) (count)


Source: IHS Herold


6/20

The upstream transaction market staged a strong rebound to

pre-recession levels in 2010, with over 325 deals worth $175

billion. Stable and rising oil prices, a recovering worldwide

economy, and more avorable credit markets were all actors

in the strong and steady pace o M&A activity during 2010.

But the biggest actor in new acquisition activity was interest

in unconventional E&P assets. Thomas calls it a white-hot

market.

Buyers included oreign players, particularly China and other

Asian countries who are seeking to secure energy assets and

access to new technologies through joint ventures with U.S.

partners. Although the super major oil and gas companies

were net sellers o properties in 2010, divesting over $30

billion in E&P assets, these companies were very active in

buying up North American shale and oil sands assets as well.

The pressure among major oil and gas companies to build

their reserve/replacement ratios is strong, says Thomas.

Especially or the super majors, its increasingly hard to

build a reserve ratio o 100% or over when the NOCs retain

so much control o worldwide supply.

North American deal count share rose sharply as a

percentage o worldwide E&P transactions rom 58% in

2009 to 73% in 2010. Investors continue to be drawn to the

vast potential o the regions shale and oil sands elds and

the technology and techniques perected to economically

develop these elds, not to mention North Americas

openness to outside investment. And because o depressed

natural gas prices, some weaker companies are open to

selling, creating an active market. Since the terms o mostlease agreements encourage the E&P companies to quickly

establish production rom their leases, an increased level

o drilling required to hold these leases has contributed to

near-term overproduction. Shale development is a capital-

intensive, long-term play, says Dillavou. Many property

owners have more acreage than they can aord to develop.

So the majors are making lots o investments in shale

properties right now, while the smaller players are selling

some o their holdings, oten or capital to develop other

properties in their portolio.

Exploration & ProductionNorth America leads the way astransactions rebound

Upstream M&A deals by value and count

0

10

20

30

40

50

60

70

80

0

20

40

60

80

100

120

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

Total deal count (RHS)Corporate valueAsset value


4

Source: IHS Herold


7/20

Looking ahead, the controversy over environmental impacts

rom racturing could complicate uture shale property

transactions. One major buyer recently inserted a clause

into its purchase agreement or shale properties that allows

the buyer to walk away rom the deal should regulatory

prohibitions against racking pass. The industry itsel is

also trying to develop solutions to the regulatory issue,

says Thomas. Meanwhile, deals are still happening, so the

industry is betting that the regulatory impact willbe manageable.

U.S. shale elds were not the only new sources o

production to attract buying interest in 2010. South America

attracted nine deals o more than a billion dollars each, as

growth-ocused companies sold mature assets and shited

capital to new deepwater rontiers in Brazil and Venezuela.

In the U.S., the permit-orium on deepwater drilling in the

Gul has signicantly dampened activity. As the industry is

orced into a wait and see posture regarding permits, it

remains to be seen i the pursuit o oshore production is a

viable option or a small company, says Shreve. We should

continue to see consolidation among smaller E&P operatorsin the Gul, with buying opportunities or larger players who

can wait out the uncertainty. Some oshore companies

are exiting that business completely to ocus on onshore

activities. We dont see the U.S. oshore regulatory

environment improving over the next several months,

says Thomas.

Future deal-making activity, we believe, should continue to

ocus on deepwater and unconventional energy sources.

We eel the next wave o ventures and interest will be in

deepwater, says Thomas. BPs recent announcement o

a joint venture with Russias Rosnet to explore deepwater

sources in the Arctic is one example o the type o

collaboration the industry is trending toward. Super majors

have the technology to explore untapped resources in places

where NOCs may not, says Thomas. As NOCs acquire

the technology they need, that may change, but in the

meantime, this is the next M&A rontier."

The pressure among major oil and gascompanies to build their reserve replacementratios is strong.

Trevear Thomas

Principal

Deloitte Consulting LLP


Source: IHS Herold


8/20

New developments o shale felds mean theneed or more pipelines and other midstreaminrastructure, and were seeing lots otransactions in that area.

Jim DillavouPartner

Deloitte & Touche LLP

MidstreamUpstream interest in shale drivesmidstream activity

Over the past several years, diversied companies have

split o pipeline assets to monetize their cash-generating

value. But transaction activity in the midstream market has

changed course somewhat, especially with shale-related

assets. Investors see the potential in the industrys need

or new capacity, ocusing on gaining access and providing

inrastructure to get unconventional sources o natural gas

supply to the markets, says Thomas.

O the midstream deal count in 2010, 77% o agreements

were related to liquid pipeline and gas gathering and

processing businesses. Midstream companies are actively

trying to extend their reach into strategically attractive

regions. New developments o shale elds mean the need

or more pipelines and other midstream inrastructure, and

were seeing lots o transactions in this area, says Dillavou.

Master limited partnerships (MLP) are still the vehicle

o choice or midstream operations. Recovering capital

markets allowed MLPs to raise signicant unds in 2010,

and large MLPs were active buyers o midstream assets

in the U.S. At the same time, businesses suitable or

MLP ormation and general partner interests in MLPs are

attractive to private equity rms and other institutional

investors. These transactions have been increasing the

participation in energy-related MLPs back to pre-recession

levels. The Alerian MLP Index, a composite o 50 energy

MLPs, rose 22% in 2010 ater rising 52% in 2009.

Deal count by midstream businesses

Diversified Liquid pipelines Gas pipelines Gas gathering/processing Tankers/others

(count)

0

5

10

15

20

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

6

Source: IHS Herold


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Weve seen a trend this past year toward companies

reacquiring the general partnership interest in MLPs, says

Shreve. Companies want to exercise better control over

their cost o capital. Also, the possibility o tax rule changes

are pushing some MLPs to tuck the general partnership

interest back under the corporate umbrella.

Looking ahead, prospects or pipeline and terminal

operators look bright, with Standard & Poors orecastingearnings growing aster than U.S. GDP in 2011.* A

rise in shale gas production will likely increase demand

or additional storage capacity in the U.S. Continued

investment in shale by upstream companies and demand

or natural gas liquids rom the petrochemicals industry

should help maintain demand and protability or the gas

gathering and processing businesses. The largest potential

is with the industrys need or new capacity, says Thomas.

New pipelines will be needed to serve shale production

areas; that may mean urther consolidation among

midstream operators so that they can have the capacity

they need to make these investments.

Midstream deal count by selected regions

(count)

0

5

10

15

20

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

United States Globally diversified Europe Canada Former Soviet Union

* Source: Standard & Poors:

Oil & Gas Storage and

Transportation Sub-Industry

Review


Source: IHS Herold


10/20

Oilfeld Equipment & ServicesNeed or service intensity drives activity

The number o deals in the oileld service segment

remained near its ve-year 2009 low in 2010, but

transaction value during the year more than doubled to

over $30 billion, as the largest companies in the industry

made major acquisitions. As E&P players increasingly

ocus on service-intensive sources in North America and

deepwater sources abroad, the major oileld service

companies are responding by expanding their geographical

reach and technological expertise. We saw some majoracquisitions in the second hal o 2010, and that activity

is extending into 2011, says Dillavou. The big actors in

these transactions are acquiring technological expertise

and providing a wider array o services to customers.

Private equity investors were active in the oileld services

market in 2010, primarily as sellers. Private equity

rms divested assets worth approximately $7.5 billion,

accounting or 25% o total deal value in 2010.

Most deals in the U.S. involved companies with nationwide

operations, especially in shale gas regions. Access to

North American technology is driving the interest in

oileld service acquisitions, says Dillavou. Major players

are looking or companies that can deliver the innovative

drilling technology required or shale extraction.

Companies with niche expertise in pressure pumping,

coiled tubing, cased hole stimulation, and mud logging

should continue to attract buyers interest. We may haveseen the last o the megadeals, says Shreve. But the large

companies are making lots o smaller transactions, and

well continue to see more o those. Thomas looks or

activity among the smaller, middle-tier players to continue.

Its a hot space to be in, with lots o opportunity, he says.

Oilfeld Services M&A deals by value and count

0

5

10

15

20

0

5

10

15

20

25

30

35

40

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08



8

Source: IHS Herold


11/20

Just as they are extending their reach onshore in North

America, major oileld service players are ollowing

their international customers into deepwater rontiers,

acquiring companies with global reach and technological

expertise to match demand. While the transaction value o

oshore services acquisitions is still below the 2008 peak,

it jumped sharply over the previous year in 2010 to $6.7

billion, ueled in part by two major acquisitions in oshore

services in the second hal o the year. Both transactions

involved major players adding to their deepwater assets.For all o 2010, nine o the top 10 acquired oileld service

companies had worldwide operations, as acquirers look to

serve the new deepwater markets oshore in Arica, Asia,

and South America.

A potentially critical opportunity or the largest oileld

service companies is the option to collaborate directly

with resource-rich NOCs and sign service contracts that

bypass the international oil companies. While its become

increasingly dicult or the major oil companies to acquire

lease agreements internationally to develop reserves, large

oileld service players can engage with the NOCs as service

providers, with the ability to provide unique and cutting-

edge technologies to the increasingly complex business o

extracting energy assets, says Dillavou.

We saw some major acquisitions in the second hal o 2010,and that activity extended into 2011. The big actors in thesetransactions are acquiring technological expertise andproviding a wider array o services to customers.

Jim Dillavou

Partner



Source: IHS Herold


12/20

Refning & MarketingStill a buyers market

Refning & Marketing M&A deals by value and count

0

1

2

3

4

5

6

0

2

4

6

8

10

12

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08



The strengthening world economy has meant better

conditions or reners. Activity picked up in 2010,

and plants are now operating at high utilization rates.

The reners have been protable in recent months,

says Shreve. "Weak natural gas prices have also beneted

reners. With low natural gas prices, reners are beneting

rom a low cost source o energy, says Shreve.

Yet, the brighter near-term undamentals are

overshadowed by the long-term likelihood o overcapacity

in the major motor uels markets o the Organisation

or Economic Co-operation and Development (OECD).

As a result, the number o transactions ell or the thirdconsecutive year. Total 2010 deal count ell rom 32 in

2009 to just 19 in 2010, although some large deals in

the ourth quarter o 2010 by OMV AG, Rosnet, and

Petrobras brought the total value o rening and marketing

deals or the year close to 2009 levels.

The rening and marketing area continues to be a buyers

market, and buyers consist primarily o opportunistic

investors operating in the U.S. In Europe, rening and

marketing M&A activity dropped rom 10 in 2009 to only

two in 2010, and several reneries remain on the market.

In the U.S., buyers have been seeking reneries withstrategic advantages, such as competitive positions in

niche markets or operations located near the acquirers

existing plant. Private equity rms are also picking up

assets as the super majors and independent reners shed

retail assets and reneries.

We may see a trend toward more carve-outs. Trevear Thomas

Principal


10

Source: IHS Herold


13/20

Overcapacity will continue to be a drag on the M&A

market in 2011. We may see a trend toward more carve-

outs, says Thomas, But buyers are still scarce and sellers

are anxious, as the industry outlook is weak. Dillavou

agrees: The undamentals o the rening business in the

developed world remain a big long-term question mark.

Given that, most acquirers will be opportunistic. We expect

private equity players to remain active in the market.

The good news or this sector is that changes in

government policy and regulation are moving more slowly

than had been anticipated last year, says Dillavou. We

didnt end up with carbon legislation in 2010, and there

have been no drastic changes in EPA regulations as

o yet; however, the uncertainty o uture legislation

and regulation continues to make or a dicult

investing environment.


Source: IHS Herold


14/20

Biouels M&A deals by value and count

Total Deal Count (RHS)Corporate ValueAsset Value

(In $ millions) (count)

0

500

1000

1500

2000

2500

0

2

4

6

8

10

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

Refning & Marketing deal count by selected regions

United States Asia Europe South America Africa Middle East Former Soviet Union

(count)

0

5

10

15

20

4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q08

Asset value Corporate value Total deal count (RHS)

12

Source: IHS Herold


15/20

SummaryRebounding with cash in hand

The recovery in M&A transactions that began the rst

hal o 2010 continued throughout the year, driving deal

count and value back to pre-recession levels. We expect

this trend to continue in 2011, resulting in greater deal

activity in oil and gas, particularly in the E&P segment o

the industry. A recovering worldwide economy, stronger

commodity prices and credit markets continue to

support M&A activity as private equity investors and large

corporations have plenty o cash or acquisitions.

North America continues to lead the way as transactions

rebound in the upstream space. Continued shale eld

development is expected to increase the need or more

pipelines and other midstream inrastructure an area

already active with many transactions. Having hit a ve

year low in 2009, service companies are beginning to see

more activity as they acquire technological expertise to

provide a wider array o services to customers. The industry

outlook or rening and marketing is more opportunistic

given improved crack spreads.


Source: IHS Herold


16/20

For more inormation, please contact a Deloitte Oil and Gas proessional:

Gary Adams

Deloitte LLP

Houston

[email protected]

+1 713 982 4160

Jason Spann

Deloitte Tax LLP

Houston

[email protected]

+1 713 982 4879

Jim Dillavou


Houston

[email protected]

+1 713 982 2137

Trevear Thomas


Houston

[email protected]

+1 713 982 4761

Jed Shreve

Deloitte Financial Advisory Services LLP

Houston

[email protected]

+1 713 982 4393

For more inormation about the Deloitte Oil & Gas Group and the Deloitte Center or Energy Solutions,

visit us at www.deloitte.com/energysolutions.

14


17/20

Current thought leadership

2010 Deloitte Oil & Gas Conerence Summary Report

The November 2010 conerence with the theme The Road Ahead for Energyaddressed the global economic

outlook or oil and gas; implications o China's appetite or ossil uels, natural gas, and alternative energy;

uture or downstream; boom in unconventional resources; the avorable environment or investment and

M&A; and capital investment barriers. Learn more by reading the 2010 Deloitte Oil & Gas Conerence

Summary Report

Ater the Spill: Oil and Gas Leaders Conront the Strategic Challenges Ahead

With the oil spill in the Gul o Mexico under control, attention has turned to the longer-term eects o

this event or the oil and gas industry. The health, saety, and environmental (HS&E) practices o oil and gascompanies have come under intense scrutiny o regulators, investors, and the public. They are expecting more

eective management o the risks involved in an inherently risky industry. This article describes how boards

and management can adopt a disciplined and structured approach and embed HS&E risk identication and

management into their organizations strategy, operations, and governance structures.

M&A Transactions in a Risk-Intensive Marketplace: Implications and Opportunities or the Oil and

Gas Industry

Whether or not now is an optimal time or an oil and gas company to consider engaging in M&A activity

depends on its strategy, balance sheet strength, and risk management capabilities. However, once a company

decides to move orward, it should consider the need to incorporate risk and risk management into every phase

o the M&A lie cycle. This article highlights how eective risk management can help an oil and gas company

to better prioritize activities, allocate resources, and enhance its ability to achieve the desired objectives or

many and/or most M&A transactions.Changing Times: Whats Next or Refners?

During the depths o the recession, there appeared to be a striking reaction to the industry: Oil companies

said they would permanently close three U.S. reneries, capable o processing 400,000 barrels a day o crude;

that is about two percent o capacity in a sector where closures are treated as a costly last resort. Now the

question is, What happens next? The short answer is that it depends on how many reneries are closed and

how long that takes. Looking at the predicament, there are likely three scenarios described in this paper: rapid

rationalization, lingering overcapacity, and new owners and perspectives.

The Gul o Mexico - Open or Business?

Despite the end o the moratorium on deepwater drilling in the Gul o Mexico, oil and gas companies are

acing new realities in the Gul and must determine their path orward. Many may not be ready to commit to

these new realities o doing business and continuing operations in the Gul. Costs to continue operations could

increase due to permitting delays, new regulations, and higher insurance costs. An even more dramatic impactlies in the new price o risk.

Oil and Gas Reality Check 2011: A Look at Ten o the Top Issues Facing the Oil Sector

This report is based on in-depth interviews with clients, industry analysts, and senior energy practitioners rom

Deloitte member rms around the world.

Deloitte Center for Energy Solutions

To receive any o these papers and view all o our new thought leadership, visit www.deloitte.com/energysolutions.



18/20

Current thought leadership (continued)

Show Me the Money: Private Equitys New Role in Shale Gas Inrastructure

Development o shale gas resources has led to signicant volumes o natural gas production coming online in

the areas o the United States where midstream inrastructure assets are still immature. This article explores the

shiting dynamics between exploration and production, traditional midstream MLPs, private equity, and how

new partnerships can support shale growth.

Buying Into Change: Recovering, Reacting, Redirecting in Oil and Gas

The 2010 mid-year version o the Oil & Gas Mergers & Acquisitions Report provides an overview o the

M&A activity in the oil and gas sector or the rst hal o 2010. The report includes views and perspectivesrom Deloittes oil and gas M&A leaders on the industrys activity and what that says about how business is

changing. The report indicates that the energy industry is getting back to normal, based on the healthy rise

in deals so ar this year. Yet, it is a new normal as the result o what the nancial markets and industry have

gone through over the past two years. The report also discusses the rapid rise o natural gas exploration and

production in unconventional ormations on shore.

Sustainability and M&A

As the M&A market continues to ramp up in many industries, issues o sustainability are higher on the radar

or acquiring companies. Expanding government attention, growing shareholder activism, greater media

exposure o sustainability issues, volatility in commodity and energy prices, and recent man-made disasters are

compelling business leaders to think longer and harder about the potential sustainability implications both

positive and negative o planned mergers or acquisitions.

Sourcing Critical Oil Field Services or Shale Plays in a Tightening Supply Market

Oileld services markets are tightening or onshore unconventional resources, especially in new regions such

as the Marcellus. Operators ace two major challenges or unconventional gas development: securing services

and equipment or operations and lack o leverage in a sellers market. This article discusses several solutions,

including the pursuit o strategic partnerships with service providers, the development o alternative supply

sources, and creating enhanced roles or E&P supply management organizations.

New Partnership Rules Shake up Shale: Price Volatility Fosters Changing Business Models or

Gas Players

Natural gas exploration and production development has changed signicantly with depressed prices, an

imbalance o supply and demand, and the subsequent response by independents, large majors, international

oil companies, and national oil companies. This article discusses the new partnership model or a new breed o

E&P company that has emerged with a ocus on core competencies and unconventional assets with a low-cost,

lean structure and strategic relationship with suppliers.

Transorm or Integrate? Choosing the Right ERP Strategy During Oil and Gas Company

Mergers and Acquisitions

At what point, ater a major merger or acquisition, do two companies become one organization? Does

it happen when the deal is done, the last o the legal documents is signed and the combined nancial

statements change rom pro orma to actual? Or does it take place ater personnel reductions and changes

are complete and a new management team is in place and working together? These are clear signs o change,

but they are also developments that spring rom top-down decisions and actions that may not ind icate whether,

within the organization, at its arthest reaches and rom bottom to top, two businesses truly have merged.

Deloitte Center for Energy Solutions

To receive any o these papers and view all o our new thought leadership, visit www.deloitte.com/energysolutions.

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19/20


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Center or Energy Solutions

About the Deloitte Center or Energy Solutions

The Deloitte Center or Energy Solutions provides a orum or innovation, thought leadership, groundbreaking

research, and industry collaboration to help companies solve the most complex energy challenges.

Through the Center, Deloittes Energy & Resources Group leads the debate on critical topics on the minds o

executivesrom legislative and regulatory policy, to operational eciency, to sustainable and protable growth. Weprovide comprehensive solutions through a global network o specialists and thought leaders.

With locations in Houston and Washington, D.C., the Deloitte Center or Energy Solutions oers interaction through

seminars, roundtables and other orms o engagement, where established and growing companies can come together

to learn, discuss and debate.

www.deloitte.com/energysolutions

This publication contains general inormation only and is based on the experiences and research o Deloitte practitioners.

Deloitte is not, by means o this publication, rendering business, nancial, investment, or other proessional advice or

services. This publication is not a substitute or such proessional advice or services, nor should it be used as a basis or

any decision or action that may aect your business. Beore making any decision or taking any action that may aect

your business, you should consult a qualied proessional advisor. Deloitte, its aliates, and related entities shall not be

responsible or any loss sustained by any person who relies on this publication.

About Deloitte

Deloitte reers to one or more o Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and

its network o member rms, each o which is a legally separate and independent entity. Please see www.deloitte.com/

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see www.deloitte.com/us/about or a detailed description o the legal structure o Deloitte LLP and its subsidiaries. Certain

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Copyright 2011 Deloitte Development LLC, All rights reserved

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Deloitte 2011 Oil & Gas M&a Outlook

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