Oil Collapse Gives Buyers Chance at Top Targets: Real M&A

[Lemonhawk]

Oil Collapse Gives Buyers Chance at Top Targets: Real M&A

The rapid drop in oil prices cut more than $20 billion from the price of some of the industry’s best assets. That may be enough to attract buyers.

Weakening global demand and a supply glut in the U.S. dragged down Brent crude oil to as low as $82.60 this week, the cheapest since 2010. That’s trimmed the once-high valuations that had stymied major deal making and left last year’s volume at the lowest level since the financial crisis. Assets in oil-rich shale formations throughout the U.S. are becoming attainable.
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Oasis Petroleum Inc. (OAS) and SM Energy Co. are some of the other attractive targets. Oasis has more real estate in the Bakken shale formation, relative to its enterprise value, than any similar-sized competitor.

“There’s a lot of guys that want to look to get into some of these plays with scale,” Sorbara of Topeka Capital Markets said.

Thomas B. Nusz, chairman and chief executive officer of Oasis, said in September that the company would be open to an offer at the right price, though it wasn’t pursuing a sale.

Sweet Spots

While SM Energy hasn’t performed as well operationally as peers, it’s still an attractive target, said Ed Hirs, a lecturer on energy economics at the University of Houston, who also runs a small oil and gas production company. SM Energy is known for holding quality leases in drilling “sweet spots,” or areas where the production potential is more prolific, he said.

A representative for Oasis, based in Houston, didn’t respond to a request for comment, nor did a representative for Denver-based SM Energy.

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http://www.bloomberg.com/news/2014-10-1 ... l-m-a.html

[dan_s]

Just remember it takes "Two to Tango". It is hard to get an acquisition done if the share price is way out of whack with reality. The Buyer has to get board approval from the Target company, which is difficult if the market cap is way below PV10. Most companies do not want to mess with a hostile takeover.

Unless you believe oil prices are going to stay low for several years, OAS and SM are trading WAY BELOW their break-up value. These two hold some very valuable acreage in the Bakken and Eagle Ford.

I do think Oasis is a company that is being built for a takeover.