By: Duane Donner
Given the high correlation between oil prices and oilfield service M&A activity, OPEC’s decision to curb production will likely have a positive effect on the U.S. Energy M&A market. Transaction volumes through the first quarter of 2018 were up 22% over Q1 2017 levels, and sentiment surrounding stability in the market remains favorable through the remainder of the year.
This positive sentiment is having a favorable effect on publicly traded oilfield service companies. The Public Oilfield Service Index is outperforming the S&P 500 in 2018, and publicly traded companies spoke about a positive outlook in their Q1 2018 earnings calls.
“In the oil market, we see global demand rising at a steady pace, driven by an improved GDP outlook for the United States and Europe. We have seen a draw on U.S. crude inventories that have pulled stocks closer to the 5-year average. These factors have resulted in a market equilibrium, which we expect will keep crude prices relatively range-bound in 2018. This recent price stability has resulted in a customer spend forecast that shows solid year-over-year growth for our short-cycle businesses, particularly in North America, where operators continue to grow rig count and well counts. ” – Lorenzo Simonelli (Chairman, President & CEO), Baker Hughes, 4.20.18
Check out this quarter’s newsletter, where we discuss in greater depth how the latest OPEC production cuts will impact the domestic M&A market. Also, we provide readers with some of the highlights from publicly traded OFS companies first quarter earnings calls.
About Founders Advisors
Founders Advisors (Founders) is a merger, acquisition & strategic advisory firm serving middle-market companies. Founders’ focus is on energy, industrial, SaaS/software, value-added distribution, industrial technology, internet, healthcare, and digital media companies located nationwide, as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M&A Securities Group, Inc. or Founders M&A Advisory, LLC, both members of member FINRA & SiPC. M&A Securities Group and Founders are unaffiliated entities. Founders MA Advisory is a wholly-owned subsidiary of Founders Advisors, LLC. Neither Founders M&A Advisory nor Founders Advisors, LLC provide investment advice. For more information, visit www.foundersib.com