Sixty-nine percent of oil and gas executives expect to actively pursue an acquisition in the next 12 months, according to the EY Oil & Gas Capital Confidence Barometer (CCB) -- an alltime high for the sector since the first CCB was published eight years ago, representing the highest deal appetite among all sectors surveyed.
With the sector becoming increasingly positive about corporate earnings, credit availability and equity valuations, deal appetite among oil and gas executives notably exceeded the global average (56 percent), reaching its highest level since 2013. Underpinned by signs of an upturn in the global economy despite geopolitical uncertainty, 96 percent of oil and gas executives expect the M&A market to improve or remain stable over the next 12 months.
"Oil and gas transactions activity has continued to be strong through 2017, as companies increasingly look for opportunities to consolidate their position, optimize portfolios and drive cost reductions," said EY Global Oil & Gas Transactions Leader Andy Brogan. "Buoyed by supportive market factors, including healthier balance sheets, overall consensus on oil price outlook and private equity firms with money to spend, M&A is likely to be propelled further during the coming months."
The survey reveals the majority of oil and gas executives (62 percent) are seeking to take proactive measures to address the impact of digital transformation. While 40 percent of C-suite respondents are planning to develop digital capabilities in-house, most (60 percent) are considering a mix of internal and external capabilities.
"In the past, the oil and gas sector has been slow to adopt digital technologies," said Brogan. "However, prolonged low commodity prices are now driving companies to increase their investment in digital technologies. Companies that embrace the future through convergence with other industries could position themselves ahead of the competition."
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