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Australia’s Woodside Petroleum is looking for acquisition opportunities despite plunging into a loss during the first half of the year.
“We’re clearly scanning the landscape very closely looking for opportunities,” the company’s chief executive Peter Coleman told the audience at Woodside’s first-half conference call.
Bargain-hunting is normal for the trough phase of the oil-industry cycle. However, this is not a typical trough, and willing buyers are few and far between, as there are way too much uncertainty and way too much debt in the industry for a regular bargain hunt.
Indeed, Woodside is being cautious with its acquisition targets. According to its CEO, the company will focus on assets that do not require heavy capital investment since it already has such assets that are waiting for better oil price levels to be developed.
Yet the company believes that the worst is behind the industry, which could open up acquisition opportunities. Among them are the purchase of Chevron’s stake in the North West Shelf LNG project and the acquisition of Cairn Energy’s 40 percent in an offshore area in Senegal.
“I would rate the external conditions created this year by the COVID-19 pandemic and oversupply in global oil and gas markets as the most difficult I’ve seen in nearly four decades in the industry,” Coleman said on the conference call, echoing the dominant sentiment in the industry.
Earlier this year, EY said in a report that it expected the current crisis to reshape the M&A strategy of oil and gas companies. It noted the low asset prices that could lure buyers but also pointed out that a low price may not be enough to spur a wave of consolidation in the sector as bargain hunters wanted to make sure the assets they bought would be resilient enough for the purchase to make sense.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.