Acquisition-hungry energy companies are back on the prowl.
Dealmakers have recovered from the shock of Britain’s “Brexit” vote last month to leave the European Union and have resumed buying oil and gas fields in choice locations in Canada and the United States, restocking their inventories on a bet that a two-year slump in the price of oil has abated.
“Buyers are increasingly confident in a stable to slowly increasing oil price – as are their funding sources, whether private equity funds or public market investors,” said Bobby Tudor, chief executive of Tudor, Pickering, Holt & Co, an oil and gas investment bank.
Oil prices CLc1 have held steady at or above $45 a barrel for a majority of the last two months and touched a 2016 high above $51, ahead of the British referendum.
Tudor said buyers were banking on it eventually settling at around $60 a barrel, giving them confidence about buying drilling acreage in some of the nation’s shale heartlands.
U.S. oil and gas producer Diamondback Energy Inc (FANG.O) last week said it would spend $560 million buying leases on oil-rich land in the Southern Delaware Basin, within the Permian Basin, the top U.S. oilfield, where initial production results have been strong and costs are coming down.