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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Is This $7.6 Billion Deal A Sign of Things Coming?

A brief but critical item this week in the oil space.

Potentially showing that a new wave of M&A mega-deals may be coming down the pipe.

That's in the oil field services sector. Where one of the world's largest companies made a big acquisition--positioning itself in the U.S. shale sector, and giving a big vote of confidence to the industry.

The firm is Siemens. Which announced it is entering the oil field sector, by purchasing Houston-based services firm Dresser-Rand.

The deal is a large one--with Siemens paying an all-cash purchase price of $7.6 billion. Showing that the mega-corp is very motivated to get into the oil field game.

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And buying Dresser-Rand will put them square in the middle of things. With that company being one of the largest suppliers of equipment and services to the U.S. oil and gas sector.

The deal shows that for large firms like Siemens, the U.S. shale opportunity is simply getting too good to miss.

The move is a bit of a departure for the big firm. But obviously a strategic line in the sand, aimed at locking down a space that has shaped up as one of the best economic opportunities going on the planet. If you're looking for growth today, the U.S. oil and gas sector looks like one of the few places that's a solid bet.

Related: IEA Investment Report – What is Right; What is Wrong

It will be interesting to see if more of the world's industrial conglomerates follow suit. A trend that could make companies in the U.S. oil services sector a sought-after item when it comes to further M&A.

Watch for another big deal like this one, which would definitely show a pattern forming. And could be a major rallying point for valuations.

Here's to going where the money is,

Dave Forest

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