Australia Prepares for Growing Challenges as Market Environment Evolves

“If you go back to 1997/1998 the price of oil was pushed from $27 a barrel down to $14 a barrel. In the next 18 months we saw Exxon purchase Mobil, BP purchase Amoco, and Chevron purchase Texaco,” Cann remembers.

“The biggest wave of oil and gas mergers in history took place in the aftermath of that steep price decline. You can expect that the pressures on these companies (today) to push them into M&A activity.”

Each analyst believed the M&A targets would likely be abroad, with South-East Asia and the United States popular destinations, while opportunities in Australia remained rare.

“In Australia it’s always been hard to buy production or near start-up assets – it’s a pretty thin market,” Hedstrom explained, adding he believed junior Australian companies would continue to focus on South-East Asia’s potential.

“Places like Indonesia are going to become more interesting for Australian companies, and maybe Malaysia and Thailand, those places as well.” 

Dartnell also expected this trend to continue, saying: “A theme that has come out and one that we think will continue in this environment is the emerging interest in Asia and then capitalizing on the good work Australian companies have done exploring and developing South-East Asia.”

Major Activity

Despite a challenging outlook, the Australian industry had, otherwise, been moving along “pretty well”, according to Hedstrom.


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