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NEW YORK (
Chevron's(CVX) acquisition of
Atlas Energy(ATLS) last week started the latest round of M&A speculation in energy. It wasn't just chatter, but trading in natural gas stocks right after the Chevron deal was announced that showed investors expect more independent oil and gas producers to be taken out, as the integrated major oil companies continue bulk up on unconventional assets.
Five of the biggest targets of M&A speculation had big weeks in trading last week, with double-digit gains, but most of the bounce came in trading right after the Chevron deal was announced. By the end of the week, the speculative natural gas acquisition plays had traded off with the rest of the markets, and on Monday morning, the nat gas M&A speculations stocks opened in the red.
It doesn't mean that investors don't expect these independent gas producers to be acquired, though. The stocks were still up in the range of 6% to 8% over the past five trading sessions even though the huge gains to open last week had moderated.
On Monday morning, Jefferies raised its price target on
Petrohawk Energy(HK - Get Report) to $22 and noted, according to a synopsis of the Petrohawk outlook reported on
Benzinga.com, "The quality of HK's acreage is undeniable. However, in this gas price environment, the valuation of its assets is tough. While a good number for its Fayetteville sale should drive the stock in the short-term, further upside could be driven by the market's realization of the value of midstream."
Investors who have been following the acquisition activity in the energy space might be wise to recall that Jefferies energy investment banking team has become a leader in these deals, and had a prominent role in the Chevron-Atlas Energy transaction.
It's no surprise, then, that a recent poll of
TheStreet readers revealed that Petrohawk is the consensus bet to next be acquired by an oil major looking to bulk up on natural gas. Approximately 38% of survey respondents said that they were placing their bet on Petrohawk to be the next acquisition. Last week's trading activity reflected this survey sentiment, too, with Petrohawk up in trading slightly more than the rest of the usual suspects in the nat gas M&A landscape.
Whichever firm, or firms, is acquired next, timing may be harder to peg than the likely takeover target.
An independent like
Range Resources(RRC - Get Report), for example, could command a much higher premium for its acreage than Atlas Energy, and that could mean a much longer road to getting buyer and seller to shake hands across the bargaining table.
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