Outlook
Looking ahead, we’ll see similar activity centered on shale ventures, with the Utica potentially seeing the most activity. Chesapeake Energy Corporation (NYSE:CHK) has already made it known that it would like to unload around 100,000 of its acres in the Utica. Meanwhile, Devon Energy Corp (NYSE:DVN) is looking to completely exit from the Utica. Devon has already packaged a portion of its Utica acreage, along with four other emerging plays, into a joint venture package with Sinopec Shanghai Petrochemical Co. (ADR) (NYSE:SHI). While these two energy giants are exiting the Utica, it still appears to be a top-tier play; it’s just not the oil-levered play those two were hoping it would become.
While those two are looking to unload assets, other companies like Linn Energy LLC (NASDAQ:LINE) are looking to continue to acquire. The difference here is that LINN is looking for mature, cash-flowing assets while those being offered by Devon Energy Corp (NYSE:DVN) and Chesapeake Energy Corporation (NYSE:CHK) still need to be developed. Linn Energy LLC (NASDAQ:LINE) sees a robust market for mature assets, and on the company’s recent conference call, it noted that while things have been slow, it appears that activity is about to pick up. Specifically, in terms of M&A activity, CEO Mark Ellis point out:
We’ve seen it pick up. Actually on the asset side, I think we mentioned in the last call it kind of got off to a slow start. We still felt like it would be a pretty robust year and that we’re actually starting to see that come to fruition where there is a number of things out there right now, and some pretty sizable things as well, that are in the marketplace, which is encouraging. And as you know, we continue to monitor the C-Corp side and look pretty hard there. So we think it’s a pretty good market.
It would appear that we’ll see a fair amount of M&A activity over the next few months. Not only will foreign buyers probably pick up additional shale assets, but we’ll probably also see a couple of large asset sales or mergers announced as the weather continues to heat up. While it’s useless to speculate as to what deals will get done, it’s still important to watch overall deal flow. However, with so many organic growth opportunities for energy companies these days, we probably won’t see too many headline-making, transformational mergers take place.
The article Is Energy Merger-and-Acquisition Activity Set to Explode? originally appeared on Fool.com is written by Matt DiLallo.
Fool contributor Matt DiLallo owns shares of Linn Energy and LinnCo. The Motley Fool owns shares of Devon Energy and has options on Chesapeake Energy.
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