Centrica 's £1.3bn hostile bid for North Sea gas outfit Venture Production is unlikely to be the last chapter in a burgeoning merger boom in the oil and gas sector, with a recent survey indicating that many within the industry expect takeover activity to increase markedly in the next five years.
The latest Oil & Gas Outlook North Sea Survey summarises the views of 344 oil executives and industry professionals, and it found that nearly 74 per cent of survey respondents forecast greater acquisition activity in the period 2010-2015. More than 45 per cent of respondents thought the North Sea would become more important to their companies during 2010-2015, compared with 32 per cent who thought it would become less important.
Even more conclusive were the views of future opportunities. Over 61 per cent of respondents thought using enhanced oil recovery techniques to maximise production from existing fields (which might otherwise recover as little as 20 to 30 per cent of the oil in a field) to be the most significant opportunity for North Sea companies.
Using better technology to exploit 'stranded' fields is the bedrock of Venture's strategy, and both the company and some of its major shareholders think there is plenty more mileage in this than Centrica's offer implies. It has described the bid as "opportunistic".
Centrica is after Venture's gas reserves, which account for 70 per cent for its overall reserve base, in order to increase its vertical integration and reduce its exposure to fluctuating wholesale gas prices. It has said the offer is "final" unless a counterbidder emerges, and it has the advantage of already owning 29.9 per cent of the company.
The Middle East is also seeing a flurry of corporate activity. The for Addax Petroleum and Heritage Oil’s highlight the potential of Kurdistan, now further underscored by Gulf Keystone's plan to sell its Algerian assets and .
Across the border in Syria, shares in Emerald Energy, co-developer of the prolific Khurbet East discovery, has confirmed it is the subject of a possible cash offer, with Chinese oil companies again thought to be the most likely buyers.
