OTC is undeniably a barometer of global oil and gas activity and judging from Simmons & Company International’s reception in Houston last night delegates from across the industry are in a positive frame of mind.
Last year’s OTC felt like a strong one and this year is on track to match or even surpass it. The numbers speak for themselves with 100,000 participants and 2,700 exhibitors covering a record 680,000 square feet of exhibition space in the renamed NRG Park.
Now in its 45th year, OTC remains the largest and single most important show and conference in the industry calendar. It is always interesting – whether the mood is upbeat or more subdued. Over the years the buzz pre and during the show has proved to be a fair indication of what the next 12 months hold in store. Based on what our team on the ground has seen thus far, the indicators are good.
Last night’s reception had added significance for our business as it celebrated the 40 years that have passed since Matt Simmons founded the company in Houston with four employees to specialise in financial advisory services for the oil industry. Today there are more than 170 people in the business, which has so far closed more than 1,000 transactions with a cumulative value of more than $200 billion.
Whilst the conference and exhibition programme provide a backdrop for the week, OTC is of course about much more than the US market. It is the forum that draws the decision makers from across all the key oil and gas provinces around the world. Around half of our work globally now involves non-US clients or counterparties and in the past 12 months we have worked on deals as far afield as Australia, Oman and Thailand.
The sheer volume of meetings, whether planned or by chance, that happen when the who’s who of the industry comes to town is arguably the most significant element of OTC for many of its attendees. The multinational audience in Houston reflects the M&A landscape and enables us to bring buyers and prospects from the Americas, Europe, Middle East and Far East together. The introductions and meetings held this week will feed into the deal pipeline as parties are matched to achieve the best strategic outcomes for both parties
With this in mind, teams from all of our global offices are here. The key objective is to meet companies, senior management teams and to build and develop relationships as well as the knowledge and understanding of business plans and strategy which, from our 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 a SME or a multinational.
In 2013, across the company we advised clients on a total of 64 deals, ranging from smaller deals at the entrepreneur level through to five transactions worth more than $1 billion.
From an M&A perspective this year, interest in deals is strong from trade buyers and private equity. The major US service companies are in bullish form because the growing complexity of realising conventional and unconventional resources makes the operators ever more reliant upon their knowhow, technology and manpower.
The forecast is certainly set fair from a service perspective in relation to global activity and we can expect the leading service sector players to continue to seek to acquire capacity, technology, intellectual property geographic reach and people through acquisition.
Whilst the overall industry outlook is strong across the US, Middle East and Far East, the positive mood of OTC might not prove to be the best indicator of UKCS activity, where we have seen some projects shifting back and delays to capex as service cost inflation hits operators in what is already a relatively high cost environment.
Nick Dalgarno is the managing director of Simmons & Company International Limited
Recommended for you
