EY: Private Equity Warms Up To Oil Deals With $1T Warchest
LONDON, June 21 (Reuters) - The world's private equity funds, with a cash pile of around $1 trillion, are stepping up their interest in the oil and gas industry, with almost a half expecting to buy assets in the sector over the next year, a survey showed on Tuesday.
Funds' appetite for investments in the sector fell sharply after the start of the oil price route two years ago. But recent signs of a rebound, coupled with abundant assets around the world, are turning the tide, advisory firm EY said in a survey of 100 private equity (PE) firms.
Around 43 percent of the firms said they were planning acquisitions by the first half of 2017 and 25 percent before the end of the year.
"Activity will pick up at the back end of the year but people are still cautious," Andy Brogan, EY Global Oil & Gas Transactions Leader told Reuters.
"The fact that the oil price seems to be sticking is gradually making people more confident that they can make some bets."
PE firms, which typically seek high returns on investment, have a warchest of around $971 billion, EY said.
The expected pickup in activity, however, is likely to vary by region.
North America remains a focal point after a large number of assets was placed on the block as the shale oil and gas boom stuttered, including a rising number of distressed companies, Brogan said. Relatively accessible financing is also supportive, he added.
Asia Pacific is also attracting buyers' interest, although the size of the market is smaller, while mature basins such as the North Sea remain less attractive due to high operating costs and liabilities linked to the clean up of old wells.
PE funds such as Carlyle Group, Blackstone Group and CVC Partners have all set up management teams in recent years to acquire and manage oil and gas assets.
Buying activity so far has nevertheless been limited and focused mostly in North America.
After peaking in 2014 at 104 deals worth $39 billion, PE activity fell sharply last year to 64 transactions, according to EY. The first quarter of 2016 saw 12 deals worth $7.6 billion, including a group of U.S.-based funds acquiring a 12.3 stake in Plains All American Pipeline for $1.5 billion.
(Reporting by Ron Bousso; Editing by Mark Potter)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension