This article was first published by Seeking Alpha on April 9, 2015
By Sarfaraz A. Khan. Research Asst. Elena Kaufmann
Historically, a prolonged slump in oil prices has led to an uptake in the M&A activity in the exploration and production space. After the drop in oil prices in the late 1990s, for instance, the industry witnessed two massive deals -- BP (NYSE:BP)'s acquisition of Amoco for $64.3 billion and Exxon's $85.6 billion merger with Mobil that gave birth to Exxon Mobil (NYSE:XOM). Those deals reshaped the oil and gas industry. Following the 50% slump in oil prices in the second half of 2014, the markets were anticipating another round of major deal making activity. The anticipation intensified following Halliburton's (NYSE:HAL) decision to acquire its rival Baker Hughes (NYSE:BHI) for $35 billion in one of the biggest deals in the oilfield services patch. Finally, yesterday, Europe's biggest oil and gas producer took the first step.
Oil major Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) has recently announced the energy deal of the decade. The company is going to purchase its European peer BG Group (OTCQX:BRGYY) for $70 billion in a cash and stock deal which will propel its position as the second biggest Western oil company, ahead of Chevron (NYSE:CVX) and behind only Exxon Mobil.