Tue Jan 27, 2009 6:16am EST
LONDON, Jan 27 (Reuters) – Mergers and acquisitions in the oil and gas industry fell 46 percent to $179 billion in 2008, and much of the focus was on securing unconventional reserves, a report said on Tuesday.
The report from professional services firm Ernst & Young [ERNY.UL] said while transaction levels were strong in the first half of 2008, the financial crisis and collapse in oil prices hit dealmaking in the second half.
The report said the largest deals were launched by western oil majors such as Royal Dutch Shell Plc (RDSa.L) and ConocoPhillips (COP.N) to secure non-traditional reserves such as coal seam gas and tight gas.
The turn to these high-cost sources is a result of national oil companies keeping the richest oil fields for themselves.
Ernst & Young said difficulties for smaller oil companies in securing finance and low oil prices could accelerate a long-expected consolidation among such players.
But it added: “We are not likely to see a repeat of the mega-mergers that reshaped the competitive landscape in the late 1990s.”
(Reporting by Tom Bergin; Editing by Hans Peters) ([email protected]; +44 207 542 1029; Reuters Messaging: [email protected]))
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