Energy Services industry review Q4-2007; RSM EquiCo Capital Markets

Industry Outlook

This past year was an exciting one for energy sector M&A. With oil prices nearing $100 per barrel and the issue of global warming putting the spotlight on alternative energy, M&A and funding activity in the sector increased over 2006. In 2007, 1,514 deals were announced in the global energy sector for a total value of $282.8 billion, compared with 1,356 deals and $266.4 billion in 2006. Although the total number of M&A transactions in North America increased by 3.6 percent in 2007, the charts below indicate that North America's share of total deals fell from 61 percent in 2006 to 58 percent in 2007. This was driven by strong activity in the rest of the world and by lower M&A activity in Canada, where drilling activity declined in 2007 and share prices of Canadian oilfield services trustswere generally depressed. Energy M&A activity in 2007 was particularly strong in Latin America and Europe (including Russia), where deal activity increased by 75.7 and 31.6 percent respectively. While the headlinegrabbing billion-dollar-plus deals were up 7 percent over 2006, the middle market experienced the strongest growth in 2007; deal activity in the $100 million to $500 million size increased 41 percent over 2006. Read complete report.