More mergers to come in the O&G SectorMore Mergers to come and here is why.
Over the past 5 years there has been a lot of O&G talent that left the majors and started their own junior companies.
These juniors have taken on riskier plays in the patch, which means drilling deeper prospects. The shortage of rigs and the cost of labour has skyrocketed during this bull run. These cost have weighed heavily on the juniors bottom line.
More times than not the juniors have been hitting gas versus oil. As we all know the price of natural gas has really been kicked down.
We all know the reasons, warm winter, hedge funds, inventories..etc..
One other factor in the whole scheme of things is the oil and gas trusts.
Every junior had an exit stratagy before, it was called the buyout by an oil and gas trust.
Well that is jusy not going to happen any more.
So here is the scenerio today, you have a bunch of juniors out there with tons of debt, low prices for their gas and no exit strategy.
So why not merge CZE and BFO to create the cash flow and the power to pick and choose the faltering juniors out there.
Believe me there are probably some Bay Street sharks out there with the same line of thinking.
So remember this! Big fish eat little fish and the banquet is about to begin.
Just my thoughts
Always open to your comments!!!!