U.S. oil & gas deals averaged $1.1 billion in the first quarter of 2011, up nearly half a billion from the first three months of 2010.
Rick Roberge is a partner in PwC’s energy practice. He attributes the jump in M&A activity partly to the high price of oil, partly to growing interest in U.S. shale plays as a source of oil, and partly due to the growing involvement of private equity firms.
“Private equity has never been, I would say, a major player in the energy space. But they have really stepped up. They’re showing tremendous interest in the shale, even conventional assets. They want to be long commodities, it would appear. And so private equity has become a new competitor in the M&A space.”
Roberge says private equity could prove particularly important in bringing shale gas into the market. He notes drilling is slowing in response to lower natural gas prices. Private equity firms, he says, have both the patience and the deep pockets to wait for prices to rise again.