I have temporarily usurped Colin as Simmons’ official blogger to provide a flavour of life from the frontline at OTC in Houston.
If anyone doubted there was a renewed sense of optimism in the industry they need only spend a few hours here where everyone who is anyone in the global industry is in town. Despite the recent commodity price volatility, the atmosphere is upbeat with no shortage of delegates and plenty of good news in terms of announcements and order awards.
OTC remains the forum that draws the decision makers from across all the key oil and gas provinces around the world. The sheer volume of meetings, planned and by chance, that happen is arguably the most significant element of the event and, from a mergers and acquisition perspective, these connections are what feed through into deal activity in the subsequent months.
Needless to say, we all had our meeting plans in place long before setting foot here and have been busy meeting companies and senior management teams to develop relationships as well as our knowledge and understanding of business plans and strategy which, from a Simmons’ perspective, is fundamental to successful M&A activity. Through this intelligence gathering, we are able to add value to our clients’ deals, whether they are an SME or a multinational.
OTC week kicked off for us with the Simmons & Co annual reception at the Junior League of Houston in the Post Oak area where around 600 guests joined us for an evening of networking.
Taking account of the evidence from the first day at OTC and the talk in the industry we can draw some informed conclusions on how 2013 will pan out in comparison to the past year.
Last year was one of continuing challenges for most of the world’s major oil consuming economies but the global demand for oil remained high. Combine this with a declining established production base and you begin to see the root factors driving exploration activity in ever more challenging environments.
International markets should therefore be even more favourable for oil and gas this year and the picture for the UKCS is equally positive with investment levels offshore reaching levels last seen decades ago. While the macro-economic underlying concerns remain, 2013 is shaping up to be one of the better years of recent times.
This is underpinned by a greater sense of certainty derived from the fact that many service companies have contracts in place to 2015 while the major capital equipment providers also have full order books to 2015.
From an M&A perspective, interest in deals is strong from trade buyers and private equity. We expect that the large, predominantly US, service companies will seek to acquire capacity, technology, intellectual property geographic reach and people through acquisition. The Middle and Far East are also very active just now. In private equity the interest is from both sector specialists and more general funds which recognise the unique opportunities the sector offers in this current market.
Once we are back in our offices the real work will begin but for now we can all take some cheer from the fact the industry has a real spring in its step.
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