The experts within our Energy Group maintain ongoing contact with a wide range of knowledgeable sources to stay abreast of the issues and trends that could impact the industry’s M&A climate or otherwise influence our clients’ businesses. Following are a few of the topics addressed in our most recent Energy Services Review, which is published quarterly.
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ENERGY REVIEW (2010: Q2) (View complete report)
Thoughts From the Group
The oil spill in the Gulf of Mexico is a “game-changing” event for the energy industry. The oil and gas industry will be faced with higher cost of exploration and production activities driven by increased government oversight and new safety and environmental regulations. We anticipate a reinvigorated commitment by the current administration to accelerating the development of the renewable energy industry. These changes are presenting opportunities for companies willing to be aggressive in the face of uncertainty.
Oilfield Services M&A Review and Outlook
Since June 2009, when drilling activity reached a low of 876 drilling rigs operating in the U.S., the industry has experienced a resurgence, with the total number of operating rigs increasing 74% to reach 1,527 in June 2010. During the same period, oil rigs increased from 183 to 561, and gas was up from 685 to 954. Vertical drilling increased from 356 to 478, while directional and horizontal drilling increasing 87% to reach 1,049. The main factors driving the improvement in drilling activity has been the stabilization of commodity pricing, with crude oil settling in the $75/barrel range, as well as the opening of the credit markets, thus allowing companies to return to projects and grow spending across oilfield services.
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