Saved by Spain?
Forget China. Why a Spanish energy company may put an end to the international M&A drought
When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at firstname.lastname@example.org
by Max Fawcett
Could the decline in international M&A in Alberta’s energy sector be about to end? That’s what the TD Securities analysts seem to think. That would be welcome news for the patch, given that foreign M&A is down 77 per cent from the lows reached in 2011. And as the Financial Post’s Jonathan Ratner reported today, “signs of a bottom may be emerging.”
Even more interesting is the fact that the uptick in interest may come not from the east but instead the west – Spain, of all places. Apparently, Repsol S.A. is looking to invest as much as $10 billion in Canada and the U.S., and given the sheer volume of assets already on the market in Alberta – TD’s report estimated that “roughly 200,000 barrels of oil equivalent are in production is being marketed through structure corporate processes, while another 60,000 barrels or so are being marketed in the form of asset packages” – it stands to reason that it may want to do some bargain shopping north of the border.
According to TD, the most likely acquisition targets are companies with “large, scalable and undeveloped acreage.” That list includes ARC Resources (TSE:ARX), Baytex Energy (TSE:BTE), Birchcliff Energy (TSE:BIR), Crescent Point Energy (TSE:CPG), Legacy Oil and Gas (TSE:LEG), Peyto Exploration (TSE:PEY), Penn West Petroleum (TSE:PWT) and Whitecap Resources (TSE:WCP).