Rate of mergers in oil industry show no sign of slowing

As this blog explored in a previous piece, the rate of mergers in Texas has increased significantly from recent years. The boom in U.S. oil production has breathed new life into the industry, and as the economy recovers, the increased availability of capital has many organizations seeking to expand their operations. 

Industry analysts and investors told The New York Times that the trend shows no sign of slowing. "Companies are lining up to take advantage of this production-growth story," Quinn Kiley, a manager of energy infrastructure investment portfolios for Advisory Research Inc., told the source. "Companies have huge opportunity sets in front of them."

Thomson Reuter's figures show that about $1.2 billion in energy mergers were announced so far in 2014, an increase of approximately 47 percent from last year. 

Several of the most recent mergers involve infrastructure organizations in the energy industry. These organizations are increasingly being bundled into master limited partnerships, or MLPs, because of the significant tax advantages to this structure.  

Deborah Byers, managing partner at Ernst & Young in Houston, told the source that the current environment could also begin to attract major foreign buyers, such as Cnooc in China or Total in France. 

Mergers in the oil and gas industry require special considerations to ensure that productivity is maintained during the transition period. Change management consulting should be sought well before rumors of a possible merger reach staff or even the press, as this can cause resistance to change to form in existing personnel. By discussing organizational change management strategies with your consultant before the announcement of the merger, your organization is far more likely to experience a smooth period of change and face the future with renewed optimism.