NEW ORLEANS - Investment bankers may dream of tie-ups between large independent oil and gas companies, but executives who could possibly do such a deal say they are not in the market.
On Monday, Canadian companies Suncor Energy Inc and Petro-Canada announced a $15 billion stock deal, but U.S. oil and gas executives point to low share prices, still-frozen credit markets and the nation's vast gas reserves locked in shale plays as reasons to go it alone for now.
"I don't see that anybody needs to do anything right now, so I'd be surprised if any of the large-cap independents bought other independents or if a major bought a large independent," Aubrey McClendon, the chief executive of Chesapeake Energy Corp told Reuters.
There may be some consolidation among small- to mid-sized companies looking to lower costs, McClendon said, adding that he would be surprised to see another deal the size of Suncor/Petro-Canada or the ConocoPhillips/Burlington Resources deal struck in 2006.
Chesapeake, with its 2.4 million acres in prime shale gas areas like the Haynesville play in Louisiana, is often chatted about as a juicy target for an oil major looking for exposure to big gas reserves in the porous rock.
"I don't really see a lot of M&A in the sector right now," Larry Benedetto, oil and gas analyst with Howard Weil, said at the company's annual energy conference.
Share prices are still too low for energy companies to consider a takeover, he said.
And with the advent of the shale plays, independent oil and gas companies now have huge inventories of natural gas that will "take them 8 or 10 years" to drill so they have no need to buy assets, Benedetto said.
STILL SOME POSSIBILITIES
Still, there could be some small deals that involve distressed companies, he added.
John Richels, president of Devon Energy Corp said his company holds the view that there will be more consolidation in the industry over time, partly as a result of economic woes. He sees deals more likely among middle-sized companies.
"It makes good sense that you would see more share-for-share transactions being done," Richels said, citing the scarcity of cash in the market.
Other larger oil and gas companies like Devon, which said big deal activity for them is unlikely this year, include EOG Resources Inc and Anadarko Petroleum Corp.
Houston energy research firm Tudor, Pickering, Holt & Co Securities Inc told clients in a note on Wednesday that if the natural gas market stays weak, deals will are not likely "imminent in any way," but it thought the best large-cap takeout plays are Apache Corp and Chesapeake.
Still, some say the steep decline of crude oil and natural gas prices from their summer peaks has created great bargains for assets.
Steven Farris, Apache's chief executive, told investors that the company is actively looking at assets, primarily in areas where it already has operations.
And Murphy Oil Corp Chief Executive David Wood told the Howard Weil Energy Conference in New Orleans that his company would be looking to add acreage in the downturn.
"I do see the opportunity to add things into our business," he said. "This is a good time for us to do that."
On Monday, Canadian companies Suncor Energy Inc and Petro-Canada announced a $15 billion stock deal, but U.S. oil and gas executives point to low share prices, still-frozen credit markets and the nation's vast gas reserves locked in shale plays as reasons to go it alone for now.
"I don't see that anybody needs to do anything right now, so I'd be surprised if any of the large-cap independents bought other independents or if a major bought a large independent," Aubrey McClendon, the chief executive of Chesapeake Energy Corp told Reuters.
There may be some consolidation among small- to mid-sized companies looking to lower costs, McClendon said, adding that he would be surprised to see another deal the size of Suncor/Petro-Canada or the ConocoPhillips/Burlington Resources deal struck in 2006.
Chesapeake, with its 2.4 million acres in prime shale gas areas like the Haynesville play in Louisiana, is often chatted about as a juicy target for an oil major looking for exposure to big gas reserves in the porous rock.
"I don't really see a lot of M&A in the sector right now," Larry Benedetto, oil and gas analyst with Howard Weil, said at the company's annual energy conference.
Share prices are still too low for energy companies to consider a takeover, he said.
And with the advent of the shale plays, independent oil and gas companies now have huge inventories of natural gas that will "take them 8 or 10 years" to drill so they have no need to buy assets, Benedetto said.
STILL SOME POSSIBILITIES
Still, there could be some small deals that involve distressed companies, he added.
John Richels, president of Devon Energy Corp said his company holds the view that there will be more consolidation in the industry over time, partly as a result of economic woes. He sees deals more likely among middle-sized companies.
"It makes good sense that you would see more share-for-share transactions being done," Richels said, citing the scarcity of cash in the market.
Other larger oil and gas companies like Devon, which said big deal activity for them is unlikely this year, include EOG Resources Inc and Anadarko Petroleum Corp.
Houston energy research firm Tudor, Pickering, Holt & Co Securities Inc told clients in a note on Wednesday that if the natural gas market stays weak, deals will are not likely "imminent in any way," but it thought the best large-cap takeout plays are Apache Corp and Chesapeake.
Still, some say the steep decline of crude oil and natural gas prices from their summer peaks has created great bargains for assets.
Steven Farris, Apache's chief executive, told investors that the company is actively looking at assets, primarily in areas where it already has operations.
And Murphy Oil Corp Chief Executive David Wood told the Howard Weil Energy Conference in New Orleans that his company would be looking to add acreage in the downturn.
"I do see the opportunity to add things into our business," he said. "This is a good time for us to do that."
