M&A in the oil and gas sector could pick up in the second half of the year with higher oil and gas prices and potential takeover targets could include Concho Resources (CXO) , Whiting Petroleum (WLL) , Oasis Petroleum (OAS) , Range Resources (RRC) , Antero Resources (AR) and Anadarko Petroleum (APC) , bond research firm CreditSights wrote in a report released Tuesday.
Anadarko could also be an acquirer in this consolidation phase, analyst Brian Gibbons told TheStreet. "Single basin players with low cost structures and relatively modest leverage will be most attractive to peers of equal or larger size," he said.
M&A activity will be helped by rising oil prices, which have stayed above $40 per barrel for the past six weeks, and increasing natural gas prices, which have remained more than $2 per thousand cubic feet equivalent over the last seven weeks, Gibbons said. He also noted strong gains for energy equities and credits as investor sentiment has lifted.
The industry is in the midst of a major transition from expansion mode to contraction and consolidation, which he expects will include a mix of large scale mega-mergers and acquisitions and will cut across sub-sectors, including integrated oil and gas companies, exploration and production companies and national, or state-owned, oil companies. "We would not be surprised to see an integrated oil [company] make a run at a large-cap E&P or large cap E&P's announce mergers of equals," he said.