Global

Details

  • Industry: Energy & Natural Resources
  • Type: Business and industry issue
  • Date: 5/23/2012

Shale gas – Focus on M&A in the United States 

In a relatively short period of time, the U.S. shale gas boom has transformed energy markets within the country and around the world. Current M&A in the U.S. shale gas industry indicates that the industry continues to mature. Major domestic companies are consolidating their shale gas interests in proven reserves, large independents are repositioning into unproven reserves, and the industry is attracting new domestic and foreign investment as the overall risk profile declines.

Issues

Valuations have strengthened, particularly for basins with exposure to liquids. In the past two years, given weak natural gas prices, the NGL-crude price linkage offered a higher incentive for investment in liquid rich shale gas exploration and oily reserves.


Looking ahead, rising NGL volumes are likely to depress NGL pricing relative to oil. While this movement is unlikely to stall M&A activity in the market, it may diminish the attractiveness of “wet” gas shale reserves and cause risk adjustments to future NGL pricing in valuation models.

 

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