After NAPE, everyone gets together, they decide collectively to put their assets on the market. Everyone gets excited that deals are being marketed and put together engineering runs on anything and everything that appears even close to decent. Offers are made, and then…nothing. The seller expectations are not met, and buyers are once again wondering why they put all of this time and effort into getting a potential deal, that was never really “for sale.”
It is a consistent cycle that we’ve seen for a number of years now. Sellers looking at a maximum dollar amount and buyers looking at a minimum, and no one is willing to meet in the middle. As we turned into 2020, there was hope that oil would rise, and we would see some transactions happen that should have happened half a decade ago.
Sellers have to realize that their numbers have to make sense. If you wouldn’t buy at that sales number, why would anyone else? Real data, showing asset value in today’s market is what people are using. So selling based off of theory or an increased “potential” will never transact.
I talk a bunch about off-market deals because I live in that part of the A & D market every day. I see when sellers come together with buyers and talk through the reasons behind the numbers. I see buy groups actively try to meet and understand seller’s figures and communicate continuously when things don’t add up.
This continuous interaction is the only way deals are getting done. With an openness and willingness to transact at numbers that can be managed, understood and valued. Until that is the norm, the industry is going to continue to cycle out deals that aren’t transacted on.
Oil and gas companies are regularly faced with many industry-specific issues to overcome. Such issues, including exploration and drilling, are often complex and intricate processes with many unique challenges to overcome. Data analytics can play a massive part in streamlining some of the most fundamental operations that are involved in the oil and gas industry.