Exit and Growth Strategies for Middle Market Businesses

M&A News | Energy Sector

By Roy Graham | Dec 02, 2016

M&A News | Energy SectorM&A News | Energy Sector – Oil producers can better withstand downturns in oil prices by looking for efficiencies in their operations. As the oil industry continues to struggle, some bright spots are emerging as producers find ways to boost efficiency enough to make up for low per-barrel prices. Companies have to carefully manage well productivity to be sure per-barrel costs don’t exceed market value. Three shale producers recently surprised the market by announcing productivity gains without higher costs or concessions from vendors. Factors from linking cost cutting and executive pay to boosting the amount of sand used in fracking to design changes have led to doubled production and a 40% drop in costs, according to Reuters. While rig count has fallen in North Dakota’s Bakken Shale oil region in the last six years, production per rig has risen from around 200 barrels a day in 2010 to just below 800 barrels per day in 2016, according to The Wall Street Journal.

New rules from the FAA authorizing drone flights for businesses, with limitations, could open up a whole host of uses for drones within the oil and gas field services industry. The rules require drones to stay in view of the operator but the unmanned craft could be used to inspect oil field equipment, help map fields, monitor assets, and take on dangerous tasks without risk. Oil and gas companies around the globe have increasingly been using drones for a variety of operations.

Industry Indicators

  • The average US retail price for diesel and regular gas, which influences profitability for oil and gas companies, fell 4.7% and 7.3%, respectively, in the week ending September 12, 2016, compared to the same week in 2015.
  • The spot price of crude oil, which affects profitability for oil and natural gas operations, rose 1.8% in the week ending September 9, 2016, compared to the same week in 2015.

Posted by Roy Graham.

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