Market outlook and summary
- The continued drop in oil and gas prices since the summer of 2014 led to a survival mindset in the industry, highlighting the importance of cost reduction and efficiency.
- The oil and gas sector proved it can be innovative and dynamic in order to survive an environment with low prices.
- Oil prices have recovered to a level of USD 50 per barrel; in part due to the production cuts by OPEC announced on 30th November 2016.
- Companies are engaging in M&A activity to increase capacity and realize synergies through cost reductions.
- The European market is internationally oriented, with 72.8% cross-border deals from January 2016 to July 2017.
- Global transaction value is up by 63.2% in 1H 2017 compared to 1H 2016, at EUR 217B versus EUR 133B. At the same time, deal volume decreased slightly.
- Alternative energy will grasp the bulk of new energy capacity, thus threatening the oil and gas sector.
- Transaction multiples reflect the differences in market outlooks for the oil and gas sector compared to the alternative energy sector.
- Gas will become more important for the transition phase towards alternative energy since it is suitable to serve as flexible power generation during peak demands.
- Positivity is slowly returning in the sector following the downturn from 2014 – 2016.
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