M&A in the oil and gas sector

FW: Reflecting on the last 12 months or so, what are some of the major trends you have witnessed in oil & gas M&A?

Quesnel: In Canadian oil & gas, M&A activity continues to focus on debt reduction, improving cash flow and unlocking market opportunities. Companies that have been active in the past 12 months have focused on consolidating their positions in certain liquids-rich resource plays, such as the Montney and Deep Basin, and several companies have taken steps to increase the weighting of natural gas in their asset base. Non-cash and alternative forms of consideration are playing a more prominent role, reflecting the lack of available capital and the financial stress that many companies are operating under. For example, 2020 saw an increase in cashless business combinations, or ‘share-for-share’ deals, sellers are more frequently reserving royalties out of the sale of their assets and parties are agreeing to contingent consideration payments should there be a return to growth when oil & gas prices strengthen.

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This article was first published in the January 2021 issue of Financier Worldwide magazine. ©2021 Financier Worldwide. All rights reserved.