In Greek mythology, the Fates, called Moirai, spun the threads of human existence and wove a person’s lifespan, joys and suffering.
The Fates of A&D still walk the earth, and they are called WTI prices.
How commodity prices fare may well continue to dominate transactions in 2017. But while Permian Basin deals carried deal activity and values in 2016, the giant land grab deals there may be dwindling, with deals moving from the $1 billion range to smaller bolt-ons. To get things moving in other plays, such as the Eagle Ford and Bakken, still higher prices are likely needed.
Nevertheless, increasing confidence in the energy industry seems likely to spur acquisition activity for North American E&P companies, Moody’s Investors Service said in a Jan. 3 report.
Even in a depressed commodity market, A&D markets recovered sharply in 2016, with a 70% increase in transaction values, Wells Fargo Securities said. In fourth-quarter 2016, 31 deals totaled $16.5 billion.
Terry Marshall, Moody’s senior vice president, said the investors’ service assumes a medium-term oil price band of $40 to $60 per barrel for Brent and West Texas Intermediate (WTI) crude.
“Within this band, we expect prices to remain volatile, with more risk of dropping,” Marshall said.