Energy Companies Cheaper Than Assets After Rout, Oil Search Says
Oil and gas companies are looking more attractive to buy than individual assets following the plunge in share prices, according to Oil Search Ltd., Exxon Mobil Corp.’s partner in Papua New Guinea.
It’s one of the few times “I’ve seen that buying companies may actually be cheaper than buying assets,” Oil Search Managing Director Peter Botten said Tuesday in a phone interview. “With the recent correction in the share market, should it be sustained, you are going to see a lot of corporate activity and consolidation.”
Oil and gas producers on Monday declined to their lowest level in almost four years as collapsing markets in China raised concern demand will falter and exacerbate a glut. The index of 40 energy explorers, refiners and drillers on the Standard & Poor’s 500 lost $17 billion in value amid a global selloff.
Australian oil and gas producer Santos Ltd., which lost two-thirds of its value in Sydney trading over the past year, said last week it has received approaches for assets and “strategic opportunities.” Santos, under pressure after a plunge in energy prices, may attract suitors including Total SA, according to Sanford C. Bernstein & Co. and IG Ltd. (by James Paton, Bloomberg Business)