Asians Have $150 billion to buy energy Asian oil and gas companies may spend $150 billion to acquire global assets including Canadianoil sands and U.S. shale gas in the next five years, Sanford C. Bernstein & Co. said in a report.
“Following $30 billion spent on overseas mergers and acquisitions in 2010, Asian oil and gas companies increased their share of global upstream M&A in the first half to 26 percent, which is a new record,” Neil Beveridge and Sabyasachi Mohanty, Hong Kong-based analysts at Bernstein, wrote in today’s report. “We expect this trend to continue with bigger and bolder deals over the coming years.”
Asian energy companies may take advantage of the selloff in stock markets to acquire assets as they expand globally, the report said. Natural resources companies in Asia, excludingAustralia and Japan, have bought $33 billion of international energy assets this year, with China and state-controlled Cnooc Ltd. (883) being the most acquisitive by value, according to data compiled by Bloomberg.
Buyers would favor companies in the U.K. and Canada, which usually have lower exploration premiums built into their valuations and are cheaper in terms of reserves per barrel of oil, the analysts wrote. These countries, unlike the U.S., also don’t have very strict restrictions on acquisitions by Asian national oil companies, according to the analysts.
In Australia, given “strategic restrictions” on foreign asset purchases, it is hard to see either Santos Ltd. (STO) andWoodside Petroleum Ltd. (WPL) as targets, the analysts said.