Global Oil and Gas M&A Outlook Early Autumn 2022

In this edition of our Global Oil and Gas M&A Outlook, we examine and evaluate current trends for commodity prices, sector-leading indicators, valuation developments, and mergers and acquisitions performed during the quarter, as well as developments on featured specialty subsectors.

Our top insights for this edition:

• Having faced a commodity supply crunch during Q1 2022, OPEC+ and the EU might combine efforts to retake pre-pandemic supply volumes, as economic sanctions on Russia build up. In the same way, the high inflation environment has threatened economic outlook, oil demand growth expectations and global consumption.
• M&A activity slowed down in terms of transaction volumes compared to last quarter, mainly explained by current geopolitical strains and rising interest rates as inflationary pressures persist globally.
• In terms of multiple performance, the spotlight was captured by the Oilfield Services (OFS) subsector. Regarding the commodity supply struggles and mentioned sanctions, the OFS sector took advantage of the tough market situation and recorded the highest EV/earnings before interest, taxes, depreciation and amortization (EBTIDA) multiple during Q2.

Kroll has a dedicated industry group with more than 100 full-time professionals, combining two essential key success factors in oil and gas transactions: (i) deep operational knowledge and market and legal understanding of the industry and (ii) corporate finance and accounting expertise.

We work with oil and gas organizations to rationalize portfolios, raise private debt and capital, find cost reduction opportunities, and successfully navigate regulatory and tax law changes.

The team has advised most major international oil companies on a variety of transactions and strategic issues, ranging from M&A mandates to full due diligence, valuation advisory, corporate reorganizations and capital raising.

Our team structure provides a flexible approach, and senior management is present throughout every phase of a transaction.

Buy-Side Advisory

From decision support at origination to deal closing and beyond, Kroll supports its clients throughout the deal cycle. Combining market data with fundamental financial competencies, we support critical decision-making with essential advice and information.

We provide our clients with the information they need to make informed business decisions for buy-side transaction projects.

From strategy to execution, Kroll enables oil and gas companies to transact, grow and realize value with greater conviction and speed and the appropriate industry insights.

Sell-Side Advisory

Sellers may face tremendous pressure to drive maximum value by bringing to market assets that are operationally optimized and transaction-ready.

Whether the seller is looking to spin-off, carve-out an asset or sell an entire company or business unit, oil and gas companies should focus on selling assets in the same rigorous way they focus on acquisitions.

Kroll’s team can help companies optimize their portfolio and improve divestment strategy and execution through the following vendor assistance actions:

• Assessing the strategy and portfolio management
• Drafting equity story development and delivery
• Executing complete due diligence as a one-stop-shop (financial, commercial, risk and compliance)
• Supporting negotiations and closing

Private Debt and Capital

Kroll has long-standing relationships with the leading providers of private debt and equity capital and supports our clients in achieving an array of strategic objectives, including:

• Capital structure, capital raising and capital alternatives (recapitalization)
• Financial structuring
• Strategic planning
• Independent view on investment bank and equity research analyst selection, pricing, valuation, and equity raising process appropriate to industry insights.

Oil and Gas Specific Services

The nature of and investment amounts required for the oil and gas industry need a thorough understanding of sector-specific drivers, such as macroeconomic and geopolitical impacts on market balances.

Our oil and gas team has extensive and global hands-on experience in the sector, and we add value by providing a bridge between technical, commercial, legal and financial teams.

The Kroll Oil and Gas team understands the idiosyncrasies of the global sector and puts the following knowledge at your disposal:

• Project and structured commodity finance advisory and asset-based lending advisory
• Joint venture audits, financial joint venture management and preparation of cost certificates
• Valuation of Exploration & Production assets, commercial contracts, etc.
• Development or tariff/rate models for midstream and downstream assets