HOUSTON (TheStreet) M&A talk was very much on the minds of executives at Jefferies' energy conference held in Houston last week.
While press wasn't invited, the investment bank revealed highlights from the sessions on Monday, Nov. 18.
Jefferies investment banker Ralph Eads said he expected M&A markets to remain relatively quiet. Though there was, for instance, speculation centering on Irving, Texas-based Pioneer Natural Resources (PXD), Eads said he didn't believe the majors are likely suitors for any exploration and production company, nor does he think smaller combinations are likely. He viewed obstacles to deals in the exploration and production sector as no tax step-ups, valuation issues, personnel shortages and shale fatigue. Companies are more likely to embrace "portfolio management" than M&A, with asset rotation being the "new mantra," and private equity as the likely winner, with EnerVest Ltd. of Houston saying deal flow is the highest it has seen, Jefferies noted. Exco Resources (XCO) of Dallas, however, expects to close two acquisitions shortly, leading Jefferies to think that sellers of gas properties are finally being more realistic in their expectations. Among the presenting oil service companies, Ensco (ESV) senior vice president of global marketing, Kevin Robert, said the London-based company was "absolutely" still considering acquisitions but hasn't found anything appealing. National Oilwell Varco (NOV) corporate development vice president, Loren Singletary, said the spinout of its distribution business will lead to a "pristine" balance sheet, i.e., more M&A focused, so expectations are that the Houston company will push into industrial as well as more into energy midstream and downstream.