Given the devastating effects of the worst downturn in the energy sector since 1986, it is no surprise that fewer people are on the shuttle from Aberdeen to Houston for OTC 2016, but that fact belies the potential for North Sea and Gulf oilfield service companies, as well as firms from associated industries, to steal a march on their competitors and secure new opportunities.
We make the foregoing observation guardedly and in the knowledge that anyone studying the plethora of opinions coming from sector analysts could on any given day conclude that crude prices will (i) be lower forever or (ii) be lower for longer or (iii) recover towards the end of this year. But then as we all know analysts’ opinions are cheap – supply exceeds demand!
The fact is deals are still being done, despite the continued feeling of uncertainty surrounding financing in the UK, leading some companies with a valuable USP to turn their attentions to potential suitors in the otherwise relatively calm waters of the Gulf of Mexico.
And it is a two-way street – there is significant potential for firms based in the US to target a move into the UKCS and EMEA, through new work originating out of Aberdeen.
Business owners making the trip to OTC to secure investment from new backers in the US, or positioning themselves for a sale to strengthen their position during the downturn should be careful not to devalue their stock due to the low oil price.
While it is undoubtedly a buyer’s market, owners of technology companies and oilfield services providers affected by the downturn but still holding a valuable offering to the market can legitimately challenge just how big the gap is between a purchaser’s expectations and what their company is truly worth when negotiating a deal.
Being in-country allows us to be there at the negotiating table with those clients investigating deals, and to strengthen existing relationships and assist as companies push new business development opportunities forward.
David Rennie is the managing partner for Stronachs LLP.