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Oil & Gas Mergers and Acquisitions Report Year-end 2010 and 2011 Outlook

Oil & Gas Mergers and Acquisitions A lot of talk, much more action

Deloitte Center for Energy Solutions

Table of contents

Introduction by Deloittes Vice Chairman, Oil & Gas 1 Strong recovery in mergers and acquisitions expected to continue Industry Overview Industry Overview Exploration & Production Exploration & Production Midstream Midstream Oilfield Equipment & Services Oilfield Equipment & Services Refining & Marketing Refining & Marketing Summary Summary 2 4 6 8 10 13

1 2 4 6 8 10 13

Source: IHS Herold 2

Strong recovery in mergers and acquisitions expected to continue

The year 2011 is shaping up to be a very strong one for energy industry deal-making activity. The recovery in mergers and acquisitions (M&A) that we began to see in the first half of 2010 continued throughout the year, driving deal count and value back to pre-recession levels. Underpinning this renewed interest in energy assets has been the strength in commodities markets. We expect that trend to continue, which will mean greater deal activity in oil and gas, particularly in the exploration and production (E&P) segment of the industry. Right now, North America remains the center of E&P transaction activity, as domestic and international buyers of all types continue to be drawn to unconventional assets. The openness of the North American markets to outside investment and the long-term potential of the regions shale and oil sands fields attract investors despite recent weakness in natural gas prices. Looking ahead, we anticipate an active transaction market to continue as stronger players, searching for reserve replacement and technological expertise, find buying opportunities among smaller companies unable to ride out the weak market for natural gas. While E&P activity in the Gulf of Mexico in 2010 continued to be troubled by a cloudy regulatory outlook, buyers, particularly from China, were actively snapping up deepwater assets in South America. Just as technological innovation has opened up vast resources to development in North America, technological advancements have helped fuel deepwater deal activity, and we expect deepwater reserves to be an area of continued excitement and buying interest in 2011. Midstream transaction activity has picked up, and we expect it will continue to be strong through 2011. Companies are focusing on extending their geographical reach and building up infrastructure to serve the new unconventional sources of gas supply. That should

translate into continued consolidation as midstream providers increase their capacity to make new investments. The same drive to serve the high-potential unconventional and deepwater markets fueled some very large transactions in the oilfield services segment in 2010. While the largest deals may have already taken place, oilfield service is expected to continue to be an active area for deals in 2011 as large oilfield service players continue to seek access to cutting-edge technologies and new markets. Refineries improved their profitability in 2010, but overcapacity continues to be a drag on asset valuations in this segment. Private equity players and international buyers attracted to depressed prices may make some strategic acquisitions in this area, but overall M&A activity in 2011 is likely to lag behind other, stronger segments of the oil and gas industry. Our M&A 2010 Review and 2011 Outlook contains more information about the past years deal-making activity and prospects for 2011 in each energy industry segment. Deloittes M&A leaders also weigh in with insights on underlying fundamentals, areas of particular strength and weakness, and exciting trends that will shape transaction activity in the future.

Gary Adams Vice Chairman U.S. Oil & Gas Deloitte LLP

As used in this document, Deloitte means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. M&A 2010 Review and 2011 Outlook 1

Industry overview
A broad recovery in transactions to pre-recession levels

The long-term potential of unconventional and deepwater energy assets attracted buyers of every sort back into the oil and gas M&A market in 2010, pushing the overall industry deal count to pre-recession levels. Merger and acquisition activity continues to recover from the low point reached in the fourth quarter of 2008 through the first half of 2009, says Jim Dillavou, partner at Deloitte & Touche LLP. Since then, transactions have been strong and they continue on an even keel. A recovering worldwide economy supports the industrys strong deal activity, as fears of a double-dip recession have faded. Stronger commodity prices and credit markets further support continued M&A activity. Were seeing a handful of new transactions each day, and plenty of money is still on the sidelines, says Jed Shreve, principal at Deloitte Financial Advisory Services LLP. Private equity players and the large corporations have plenty of cash for deals. Financials and fundamentals within the industry are particularly strong, thanks to rising oil prices. Right now, weve got oil prices in the $100 range, and that price seems very real, with a strong floor under it, says Dillavou. North American gas is a different story, where prices have weakened due to successful drilling programs. However, that is not stopping the major oil and gas companies from snapping up North American gas assets to further diversify their energy portfolios. Making investments when prices are low is a good strategy, says Trevear Thomas, principal at Deloitte Consulting LLP. These players are in it for the long haul. Buyers include super majors looking for high-potential assets, the Chinese and other international players, and private equity funds. The Chinese oil and investment companies are making long-term investments in North America, particularly in Canada, says Dillavou, and they are pursuing oil and gas resources in practically all corners of the world. Chinese acquisitions of deepwater assets in Brazil and conventional mature assets in Argentina led to a jump of nearly 350% in transaction value in South America. While the majors and National Oil Companies (NOCs) are focused on resources, private equity investors remain active in all segments of the industry, including transportation, storage, processing, and other infrastructure.
2 Note: M&A activity examined in this report represents mergers and acquisitions involving oil and gas companies between first quarter 2008 and fourth quarter 2010 with values greater than $10 million, including transactions with no disclosures on reserves and/or production. Deloittes methodology takes a deeper look into the M&A transaction data. Our analysis has excluded several transactions between affiliated companies to provide a more accurate picture of M&A activity in the sector.

Source: IHS Herold

Were seeing a handful of new transactions each day, and plenty of money is still on the sidelines.
Jed Shreve Principal Deloitte Financial Advisory Services LLP Oil & Gas M&A deals by value and count
(In $ billions) 80 70 60 50 40 30 20 10 0 0 50 100 150 (count) 200

Overall, deal count in the industry rose 12% in 2010 to 443, while value increased 25% to $227 billion. M&A activity was concentrated in E&P, with acquisitions in North American shale and oil sands assets leading the way. North Americas deal count share rose from 54% to 68% of the worldwide total. Shreve marvels at how domestic industry prospects have changed in just a few years. New exploration and recovery technologies have opened up vast unconventional resources to production in the U.S., transforming the industrys transaction market and investment plans. Its interesting how, about ten years ago, more than 30 liquid natural gas (LNG) regasification import terminals were proposed for construction in this country, as we were running out of natural gas supplies. Now, discussions are taking place to build liquefaction plants to export natural gas out of the U.S. Thats a 180 degree transformation in a decade.

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Asset value

Corporate value

Total deal count (RHS)

Source: IHS Herold M&A 2010 Review and 2011 Outlook 3

Exploration & Production


North America leads the way as transactions rebound

The upstream transaction market staged a strong rebound to pre-recession levels in 2010, with over 325 deals worth $175 billion. Stable and rising oil prices, a recovering worldwide economy, and more favorable credit markets were all factors in the strong and steady pace of M&A activity during 2010. But the biggest factor in new acquisition activity was interest in unconventional E&P assets. Thomas calls it a white-hot market. Buyers included foreign players, particularly China and other Asian countries who are seeking to secure energy assets and access to new technologies through joint ventures with U.S. partners. Although the super major oil and gas companies were net sellers of properties in 2010, divesting over $30 billion in E&P assets, these companies were very active in buying up North American shale and oil sands assets as well. The pressure among major oil and gas companies to build their reserve/replacement ratios is strong, says Thomas. Especially for the super majors, its increasingly hard to build a reserve ratio of 100% or over when the NOCs retain so much control of worldwide supply.

North American deal count share rose sharply as a percentage of worldwide E&P transactions from 58% in 2009 to 73% in 2010. Investors continue to be drawn to the vast potential of the regions shale and oil sands fields and the technology and techniques perfected to economically develop these fields, not to mention North Americas openness to outside investment. And because of depressed natural gas prices, some weaker companies are open to selling, creating an active market. Since the terms of most lease agreements encourage the E&P companies to quickly establish production from their leases, an increased level of drilling required to hold these leases has contributed to near-term overproduction. Shale development is a capitalintensive, long-term play, says Dillavou. Many property owners have more acreage than they can afford to develop. So the majors are making lots of investments in shale properties right now, while the smaller players are selling some of their holdings, often for capital to develop other properties in their portfolio.

Upstream M&A deals by value and count


(In $ billions) 80 70 60 50 40 30 20 10 0 1Q08 Asset value 2Q08 3Q08 Corporate value 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 20 80 (count) 120

100

60

40

Total deal count (RHS)

Source: IHS Herold

Looking ahead, the controversy over environmental impacts from fracturing could complicate future shale property transactions. One major buyer recently inserted a clause into its purchase agreement for shale properties that allows the buyer to walk away from the deal should regulatory prohibitions against fracking pass. The industry itself is also trying to develop solutions to the regulatory issue, says Thomas. Meanwhile, deals are still happening, so the industry is betting that the regulatory impact will be manageable. U.S. shale fields were not the only new sources of production to attract buying interest in 2010. South America attracted nine deals of more than a billion dollars each, as growth-focused companies sold mature assets and shifted capital to new deepwater frontiers in Brazil and Venezuela. In the U.S., the permit-orium on deepwater drilling in the Gulf has significantly dampened activity. As the industry is forced into a wait and see posture regarding permits, it remains to be seen if the pursuit of offshore production is a viable option for a small company, says Shreve. We should continue to see consolidation among smaller E&P operators in the Gulf, with buying opportunities for larger players who can wait out the uncertainty. Some offshore companies are exiting that business completely to focus on onshore activities. We dont see the U.S. offshore regulatory environment improving over the next several months, says Thomas. Future deal-making activity, we believe, should continue to focus on deepwater and unconventional energy sources. We feel the next wave of ventures and interest will be in deepwater, says Thomas. BPs recent announcement of a joint venture with Russias Rosneft to explore deepwater sources in the Arctic is one example of the type of collaboration the industry is trending toward. Super majors have the technology to explore untapped resources in places where NOCs may not, says Thomas. As NOCs acquire the technology they need, that may change, but in the meantime, this is the next M&A frontier."

The pressure among major oil and gas companies to build their reserve replacement ratios is strong.

Trevear Thomas Principal Deloitte Consulting LLP

Source: IHS Herold M&A 2010 Review and 2011 Outlook 5

Midstream
Upstream interest in shale drives midstream activity
Over the past several years, diversified companies have split off pipeline assets to monetize their cash-generating value. But transaction activity in the midstream market has changed course somewhat, especially with shale-related assets. Investors see the potential in the industrys need for new capacity, focusing on gaining access and providing infrastructure to get unconventional sources of natural gas supply to the markets, says Thomas. Of the midstream deal count in 2010, 77% of agreements were related to liquid pipeline and gas gathering and processing businesses. Midstream companies are actively trying to extend their reach into strategically attractive regions. New developments of shale fields mean the need for more pipelines and other midstream infrastructure, and were seeing lots of transactions in this area, says Dillavou. Master limited partnerships (MLP) are still the vehicle of choice for midstream operations. Recovering capital markets allowed MLPs to raise significant funds in 2010, Deal count by midstream businesses
(count) 20

New developments of shale fields mean the need for more pipelines and other midstream infrastructure, and were seeing lots of transactions in that area.
Jim Dillavou Partner Deloitte & Touche LLP and large MLPs were active buyers of midstream assets in the U.S. At the same time, businesses suitable for MLP formation and general partner interests in MLPs are attractive to private equity firms and other institutional investors. These transactions have been increasing the participation in energy-related MLPs back to pre-recession levels. The Alerian MLP Index, a composite of 50 energy MLPs, rose 22% in 2010 after rising 52% in 2009.

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3Q08

4Q08 Gas pipelines

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2Q09

3Q09

4Q09 Tankers/others

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2Q10

3Q10

4Q10

Diversied

Liquid pipelines

Gas gathering/processing

Source: IHS Herold 6

Weve seen a trend this past year toward companies reacquiring the general partnership interest in MLPs, says Shreve. Companies want to exercise better control over their cost of capital. Also, the possibility of tax rule changes are pushing some MLPs to tuck the general partnership interest back under the corporate umbrella. Looking ahead, prospects for pipeline and terminal operators look bright, with Standard & Poors forecasting earnings growing faster than U.S. GDP in 2011.* A rise in shale gas production will likely increase demand for additional storage capacity in the U.S. Continued investment in shale by upstream companies and demand for natural gas liquids from the petrochemicals industry should help maintain demand and profitability for the gas gathering and processing businesses. The largest potential is with the industrys need for new capacity, says Thomas. New pipelines will be needed to serve shale production areas; that may mean further consolidation among midstream operators so that they can have the capacity they need to make these investments. Midstream deal count by selected regions
(count) 20

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4Q08 Europe

1Q09 Canada

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4Q09

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United States * Source: Standard & Poors: Oil & Gas Storage and Transportation Sub-Industry Review Source: IHS Herold

Globally diversied

Former Soviet Union

M&A 2010 Review and 2011 Outlook

Oilfield Equipment & Services


Need for service intensity drives activity

The number of deals in the oilfield service segment remained near its five-year 2009 low in 2010, but transaction value during the year more than doubled to over $30 billion, as the largest companies in the industry made major acquisitions. As E&P players increasingly focus on service-intensive sources in North America and deepwater sources abroad, the major oilfield service companies are responding by expanding their geographical reach and technological expertise. We saw some major acquisitions in the second half of 2010, and that activity is extending into 2011, says Dillavou. The big factors in these transactions are acquiring technological expertise and providing a wider array of services to customers. Private equity investors were active in the oilfield services market in 2010, primarily as sellers. Private equity firms divested assets worth approximately $7.5 billion, accounting for 25% of total deal value in 2010. Oilfield Services M&A deals by value and count
(In $ billions) 20

Most deals in the U.S. involved companies with nationwide operations, especially in shale gas regions. Access to North American technology is driving the interest in oilfield service acquisitions, says Dillavou. Major players are looking for companies that can deliver the innovative drilling technology required for shale extraction. Companies with niche expertise in pressure pumping, coiled tubing, cased hole stimulation, and mud logging should continue to attract buyers interest. We may have seen the last of the megadeals, says Shreve. But the large companies are making lots of smaller transactions, and well continue to see more of those. Thomas looks for activity among the smaller, middle-tier players to continue. Its a hot space to be in, with lots of opportunity, he says.

(count) 40 35

15

30 25

10

20 15

10 5

0 1Q08 Asset value 2Q08 3Q08 Corporate value 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Total deal count (RHS)

Source: IHS Herold 8

We saw some major acquisitions in the second half of 2010, and that activity extended into 2011. The big factors in these transactions are acquiring technological expertise and providing a wider array of services to customers.

Jim Dillavou Partner Deloitte & Touche LLP

Just as they are extending their reach onshore in North America, major oilfield service players are following their international customers into deepwater frontiers, acquiring companies with global reach and technological expertise to match demand. While the transaction value of offshore services acquisitions is still below the 2008 peak, it jumped sharply over the previous year in 2010 to $6.7 billion, fueled in part by two major acquisitions in offshore services in the second half of the year. Both transactions involved major players adding to their deepwater assets. For all of 2010, nine of the top 10 acquired oilfield service companies had worldwide operations, as acquirers look to serve the new deepwater markets offshore in Africa, Asia, and South America.

A potentially critical opportunity for the largest oilfield service companies is the option to collaborate directly with resource-rich NOCs and sign service contracts that bypass the international oil companies. While its become increasingly difficult for the major oil companies to acquire lease agreements internationally to develop reserves, large oilfield service players can engage with the NOCs as service providers, with the ability to provide unique and cuttingedge technologies to the increasingly complex business of extracting energy assets, says Dillavou.

Source: IHS Herold M&A 2010 Review and 2011 Outlook 9

Refining & Marketing


Still a buyers market

Refining & Marketing M&A deals by value and count


(In $ billions) 6 (count) 12

10

0 1Q08 Asset value 2Q08 3Q08 Corporate value 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Total deal count (RHS)

The strengthening world economy has meant better conditions for refiners. Activity picked up in 2010, and plants are now operating at high utilization rates. The refiners have been profitable in recent months, says Shreve. "Weak natural gas prices have also benefited refiners. With low natural gas prices, refiners are benefiting from a low cost source of energy, says Shreve. Yet, the brighter near-term fundamentals are overshadowed by the long-term likelihood of overcapacity in the major motor fuels markets of the Organisation for Economic Co-operation and Development (OECD). As a result, the number of transactions fell for the third consecutive year. Total 2010 deal count fell from 32 in 2009 to just 19 in 2010, although some large deals in the fourth quarter of 2010 by OMV AG, Rosneft, and Petrobras brought the total value of refining and marketing deals for the year close to 2009 levels.

We may see a trend toward more carve-outs.


Trevear Thomas Principal Deloitte Consulting LLP The refining and marketing area continues to be a buyers market, and buyers consist primarily of opportunistic investors operating in the U.S. In Europe, refining and marketing M&A activity dropped from 10 in 2009 to only two in 2010, and several refineries remain on the market. In the U.S., buyers have been seeking refineries with strategic advantages, such as competitive positions in niche markets or operations located near the acquirers existing plant. Private equity firms are also picking up assets as the super majors and independent refiners shed retail assets and refineries.

Source: IHS Herold 10

Overcapacity will continue to be a drag on the M&A market in 2011. We may see a trend toward more carveouts, says Thomas, But buyers are still scarce and sellers are anxious, as the industry outlook is weak. Dillavou agrees: The fundamentals of the refining business in the developed world remain a big long-term question mark. Given that, most acquirers will be opportunistic. We expect private equity players to remain active in the market.

The good news for this sector is that changes in government policy and regulation are moving more slowly than had been anticipated last year, says Dillavou. We didnt end up with carbon legislation in 2010, and there have been no drastic changes in EPA regulations as of yet; however, the uncertainty of future legislation and regulation continues to make for a difficult investing environment.

Source: IHS Herold M&A 2010 Review and 2011 Outlook 11

Refining & Marketing deal count by selected regions


(count) 20

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2Q08 Asia

3Q08 Europe

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2Q09 Africa

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South America

Middle East

Former Soviet Union

Biofuels M&A deals by value and count


(In $ millions) 2500 (count) 10

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Value Asset value

Corporate Value Corporate value

Total Deal count (RHS) deal Count (RHS)

Source: IHS Herold 12

Summary
Rebounding with cash in hand

The recovery in M&A transactions that began the first half of 2010 continued throughout the year, driving deal count and value back to pre-recession levels. We expect this trend to continue in 2011, resulting in greater deal activity in oil and gas, particularly in the E&P segment of the industry. A recovering worldwide economy, stronger commodity prices and credit markets continue to support M&A activity as private equity investors and large corporations have plenty of cash for acquisitions.

North America continues to lead the way as transactions rebound in the upstream space. Continued shale field development is expected to increase the need for more pipelines and other midstream infrastructure an area already active with many transactions. Having hit a five year low in 2009, service companies are beginning to see more activity as they acquire technological expertise to provide a wider array of services to customers. The industry outlook for refining and marketing is more opportunistic given improved crack spreads.

Source: IHS Herold M&A 2010 Review and 2011 Outlook 13

For more information, please contact a Deloitte Oil and Gas professional: Gary Adams Deloitte LLP Houston gaadams@deloitte.com +1 713 982 4160 Jim Dillavou Deloitte & Touche LLP Houston jdillavou@deloitte.com +1 713 982 2137 Jed Shreve Deloitte Financial Advisory Services LLP Houston jshreve@deloitte.com +1 713 982 4393 Jason Spann Deloitte Tax LLP Houston jspann@deloitte.com +1 713 982 4879 Trevear Thomas Deloitte Consulting LLP Houston trethomas@deloitte.com +1 713 982 4761

For more information about the Deloitte Oil & Gas Group and the Deloitte Center for Energy Solutions, visit us at www.deloitte.com/energysolutions.

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Current thought leadership

2010 Deloitte Oil & Gas Conference Summary Report The November 2010 conference with the theme The Road Ahead for Energy addressed the global economic outlook for oil and gas; implications of China's appetite for fossil fuels, natural gas, and alternative energy; future for downstream; boom in unconventional resources; the favorable environment for investment and M&A; and capital investment barriers. Learn more by reading the 2010 Deloitte Oil & Gas Conference Summary Report After the Spill: Oil and Gas Leaders Confront the Strategic Challenges Ahead With the oil spill in the Gulf of Mexico under control, attention has turned to the longer-term effects of this event for the oil and gas industry. The health, safety, and environmental (HS&E) practices of oil and gas companies have come under intense scrutiny of regulators, investors, and the public. They are expecting more effective management of the risks involved in an inherently risky industry. This article describes how boards and management can adopt a disciplined and structured approach and embed HS&E risk identification and management into their organizations strategy, operations, and governance structures. M&A Transactions in a Risk-Intensive Marketplace: Implications and Opportunities for the Oil and Gas Industry Whether or not now is an optimal time for an oil and gas company to consider engaging in M&A activity depends on its strategy, balance sheet strength, and risk management capabilities. However, once a company decides to move forward, it should consider the need to incorporate risk and risk management into every phase of the M&A life cycle. This article highlights how effective risk management can help an oil and gas company to better prioritize activities, allocate resources, and enhance its ability to achieve the desired objectives for many and/or most M&A transactions. Changing Times: Whats Next for Refiners? During the depths of the recession, there appeared to be a striking reaction to the industry: Oil companies said they would permanently close three U.S. refineries, capable of processing 400,000 barrels a day of crude; that is about two percent of capacity in a sector where closures are treated as a costly last resort. Now the question is, What happens next? The short answer is that it depends on how many refineries are closed and how long that takes. Looking at the predicament, there are likely three scenarios described in this paper: rapid rationalization, lingering overcapacity, and new owners and perspectives. The Gulf of Mexico - Open for Business? Despite the end of the moratorium on deepwater drilling in the Gulf of Mexico, oil and gas companies are facing new realities in the Gulf and must determine their path forward. Many may not be ready to commit to these new realities of doing business and continuing operations in the Gulf. Costs to continue operations could increase due to permitting delays, new regulations, and higher insurance costs. An even more dramatic impact lies in the new price of risk. Oil and Gas Reality Check 2011: A Look at Ten of the Top Issues Facing the Oil Sector This report is based on in-depth interviews with clients, industry analysts, and senior energy practitioners from Deloitte member firms around the world.

Deloitte Center for Energy Solutions To receive any of these papers and view all of our new thought leadership, visit www.deloitte.com/energysolutions.

M&A 2010 Review and 2011 Outlook

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Current thought leadership (continued)

Show Me the Money: Private Equitys New Role in Shale Gas Infrastructure Development of shale gas resources has led to significant volumes of natural gas production coming online in the areas of the United States where midstream infrastructure assets are still immature. This article explores the shifting dynamics between exploration and production, traditional midstream MLPs, private equity, and how new partnerships can support shale growth. Buying Into Change: Recovering, Reacting, Redirecting in Oil and Gas The 2010 mid-year version of the Oil & Gas Mergers & Acquisitions Report provides an overview of the M&A activity in the oil and gas sector for the first half of 2010. The report includes views and perspectives from Deloittes oil and gas M&A leaders on the industrys activity and what that says about how business is changing. The report indicates that the energy industry is getting back to normal, based on the healthy rise in deals so far this year. Yet, it is a new normal as the result of what the financial markets and industry have gone through over the past two years. The report also discusses the rapid rise of natural gas exploration and production in unconventional formations on shore. Sustainability and M&A As the M&A market continues to ramp up in many industries, issues of sustainability are higher on the radar for acquiring companies. Expanding government attention, growing shareholder activism, greater media exposure of sustainability issues, volatility in commodity and energy prices, and recent man-made disasters are compelling business leaders to think longer and harder about the potential sustainability implications both positive and negative of planned mergers or acquisitions. Sourcing Critical Oil Field Services for Shale Plays in a Tightening Supply Market Oilfield services markets are tightening for onshore unconventional resources, especially in new regions such as the Marcellus. Operators face two major challenges for unconventional gas development: securing services and equipment for operations and lack of leverage in a sellers market. This article discusses several solutions, including the pursuit of strategic partnerships with service providers, the development of alternative supply sources, and creating enhanced roles for E&P supply management organizations. New Partnership Rules Shake up Shale: Price Volatility Fosters Changing Business Models for Gas Players Natural gas exploration and production development has changed significantly with depressed prices, an imbalance of supply and demand, and the subsequent response by independents, large majors, international oil companies, and national oil companies. This article discusses the new partnership model for a new breed of E&P company that has emerged with a focus on core competencies and unconventional assets with a low-cost, lean structure and strategic relationship with suppliers. Transform or Integrate? Choosing the Right ERP Strategy During Oil and Gas Company Mergers and Acquisitions At what point, after a major merger or acquisition, do two companies become one organization? Does it happen when the deal is done, the last of the legal documents is signed and the combined financial statements change from pro forma to actual? Or does it take place after personnel reductions and changes are complete and a new management team is in place and working together? These are clear signs of change, but they are also developments that spring from top-down decisions and actions that may not indicate whether, within the organization, at its farthest reaches and from bottom to top, two businesses truly have merged. Deloitte Center for Energy Solutions To receive any of these papers and view all of our new thought leadership, visit www.deloitte.com/energysolutions.
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Center for Energy Solutions


About the Deloitte Center for Energy Solutions The Deloitte Center for Energy Solutions provides a forum for innovation, thought leadership, groundbreaking research, and industry collaboration to help companies solve the most complex energy challenges. Through the Center, Deloittes Energy & Resources Group leads the debate on critical topics on the minds of executivesfrom legislative and regulatory policy, to operational efficiency, to sustainable and profitable growth. We provide comprehensive solutions through a global network of specialists and thought leaders. With locations in Houston and Washington, D.C., the Deloitte Center for Energy Solutions offers interaction through seminars, roundtables and other forms of engagement, where established and growing companies can come together to learn, discuss and debate. www.deloitte.com/energysolutions This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2011 Deloitte Development LLC, All rights reserved Member for Deloitte Touche Tohmatsu Limited