Mergers and acquisitions in the oil and gas sector

This chapter examines mergers and acquisitions (M&As) in the oil and gas industry in emerging and developing economies. The chapter shows how the aggressive tactical or cyclical M&A strategies of the past have made way to restrained, strategic, and environment-focused M&A deals in recent times. The study shows that the global merger and acquisition (M&A) activity in 2021 far surpassed pre-pandemic levels, nearing the peaks of 2015. In the peak of the COVID-19 pandemic when oil prices fell to their lowest levels in the past decade, M&A deal counts and deal values also fell to their lowest levels. Since then, M&A activities have had a rebound on the back of an optimistic outlook for the industry as economies recover and life returns to normalcy. Despite some key M&A challenges identified in the sector as well as the fundamental changes made to M&A strategy of oil and gas deal-making, it is important for M&A O&G companies to well prioritise capital discipline, strengthen balance sheet and shareholder distributions over price-led growth and spending, and design a strong post-merger strategy to ensure a smooth consolidation of the two entities, post M&A.