Oil and gas companies, oil and gas service companies, law firms, financial service companies, and government institutions, have all been calling for competitive advantage through mergers and acquisitions (M&A) in Malaysia. In recent times, Malaysian oil and gas service companies have been adversely hit by the low oil price regime. Petronas, the leading national oil company of Malaysia, has cut down significantly on the awarding of new production sharing contracts (PSCs) and risk sharing contracts (RSCs). Apart from investment on brownfield projects, final investment decision (FID) on upstream greenfield projects are likely to be deferred. The Asia-Pacific region’s upstream expenditure in 2016 is expected to decrease by 33% compared to 2015 levels (it declined by 21% compared to 2014 levels).
At the same time, the Asia-Pacific region is a net oil importer, importing around 75% of its oil requirements. This trend is expected to continue.
As a result, service companies have a greater challenge in keeping their revenue streams growing. Consolidation could provide a solution in these tough times and lead to major advantages like economies of scale, geographic diversification, and integration. This study provides an analysis of the expected M&A themes in the oil and gas industry over the course of the next decade and beyond. The Global Energy and Environment Research Team at Frost and Sullivan also picks the top sectors and the top 16 companies in the oil and gas services sector in Malaysia which are ripe for consolidation.
• O&G - Upstream and downstream
o Material-based industry
o Equipment-based industry (rental, specific equipment provider, etc.)
o Gas utilisation industry
• Supporting services
o Construction service:
• EPC companies (Planning, Implementation & Supervision)
o Non-construction service:
• Seismic Survey and Non Seismic Survey
• Geology and Geophysics
• Drilling and Well Drilling Operations
• Waste Management
o Building a list of 1000+ companies operating throughout the oil and gas value chain
o 30+ industry sub sectors were identified, based on current market condition and value chain position
o An initial analysis conducted through primary interviews with different industry stakeholder
o Each of these sectors were analyzed in in detail from a risk- opportunity perspective to arrive at the most promising companies per sector
Key Questions that This Study Will Answer:
Who: Who are the most active buyers?
What: What are the hottest sectors for the M&A deals?
Where: Where are the buyers located? Which region is most attracted to the Malaysian O&G sector?
When: An analysis of year-wise transactions
Why: What is the underlying logic behind these M&A deals?
How: How much were the target companies valued at an aggregate level?