| Impact of the Financial Crisis on Oil & Gas | | | | 2008 to September 2008. However, the number of |
| Exploration and Production Investment Report ( ) | | | | M&As went down to 41 deals in October 2008 |
| focuses on the key challenges and issues faced by | | | | and just 36 deals in November 2008. Going forward, |
| exploration and production companies. | | | | highly leveraged deals will become more difficult in the |
| The financial crisis that has created a world wide | | | | sector due to restricted access to credit. However, |
| credit crunch may stem the flow of capital | | | | we expect further consolidation in the industry driven |
| expenditure by exploration and production (E&P) | | | | primarily by reserve replacement pressures and the |
| companies. With commodities prices now having fallen | | | | need to diversify geographically. |
| 63% for oil and 50% for natural gas off recent highs | | | | In 2008, production growth is expected to be around |
| in July 2008, E&P companies are cutting back | | | | 14%, the highest growth rate since 2003. If |
| their capital budgets and drilling plans for the | | | | commodity prices continue to trade around the |
| remainder of 2008 and 2009. | | | | current level, companies are expected to cut down |
| E&P companies are expected to spend around | | | | their initial production guidance for 2009 and onwards. |
| $96.2 billion in 2008, up by 41% from $68.4 million in | | | | The global financial and economic crisis has led to |
| 2007. The fall in oil prices, on top of the credit crisis is | | | | falling stock markets and oil prices. The combination |
| expected to end this trend. The plunge in oil prices | | | | of falling stock markets and oil prices could be |
| near $45 a barrel and natural gas near $6 per mcf will | | | | enough to trigger strategic acquisitions and |
| curtail E&P companies' spending on new | | | | partnerships by the oil and gas companies. To date, |
| projects, limit production growth. | | | | 514 E&P deals (Asset Transactions, Merger and |
| The financial crises have led to the reduction in the | | | | Acquisition) took place globally, with a combined |
| number of M&A deals in the upstream oil & | | | | worth of around $138.6 billion, as compared to 437 |
| gas industry. There were on an average around 48 | | | | deals in 2007, with a combined worth of $141.5 billion. |
| upstream M&A deals every month during April | | | | |