Is OFS Consolidation About to Take Off?

Is OFS Consolidation About to Take Off?
Rigzone prognosticators identify trends to watch this week in the oil and gas markets.

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)

With a notable exception between Liberty Oilfield Services (NYSE: LBRT) and a unit of Schlumberger (NYSE: SLB), operating companies have commanded the limelight this year in upstream mergers and acquisitions (M&A). One of Rigzone’s regular market-watchers contends that oilfield services (OFS) will likely garner more attention within the realm of M&A. Read on for his reasoning, along with additional views on what to watch this week in the oil and gas markets.

Tom Curran, Senior Energy Services and Equipment Analyst in Equity Research, B. Riley FBR, Inc.: We still believe that OFS will see its own fourth-quarter surge in mergers and acquisitions, following last month’s Liberty Oilfield Services-OneStim deal, and our focus throughout the rest of earnings season will remain on whether any specific player(s) and/or niche seems close to a meaningful deal. As with the vast majority of sizeable upstream oil and gas transactions that have occurred over the past year, we expect future OFS consolidation to be dominated by all-stock deals, with a high percentage of low- to no-premium mergers-of-equals.

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: As we start to get colder weather it will be interesting to see how increased heating demand impacts both natural gas liquids (NGL) and gas. Most restaurants have purchased a combination of propane or electric heaters to keep patios open to serve customers and keep their business afloat. That’s the decision municipalities have put to them, with indoor dining restrictions, and they’ve responded to keep their jobs as anyone would. This amount of incremental heating and NGL demand and will be a new factor this winter.

Barani Krishnan, Senior Commodities Analyst, More aberration in U.S. government petroleum data and OPEC+ supply-demand games. They don’t call this the silly season for nothing.

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