The oil and gas industry has come into sharp focus for deal-makers on the back of a Donald Trump victory in the US election, which they believe will likely see them prosper as the trend of industry consolidation continues.
Support for more oil and gas production has been a key message during the Republican Party campaign led by Mr Trump, which included him repeatedly saying the slogan “drill baby drill” – and talking about the “liquid gold” that the country had more of than anywhere else in the world, in his victory speech over Democrat presidential candidate Kamala Harris.
With more oil and gas production coming on stream in the United States as a result of president-elect Trump’s industry support, as anticipated, one outcome could be that the oil price falls which could significantly weaken Russia, a major producer of the commodity, at a time it is at war with Ukraine.
However, others believe the oil price will remain strong, and the demand for energy is expected to double in the next two decades with the use of electric vehicles and artificial intelligence.
The oil price is largely set by OPEC so it would be in its hands and the outcome may be a neutral impact.
The bigger takeaway is that getting approval for projects – and potentially funding – will be easier for oil and gas players in the US.
The whole aim of Mr Trump is to see more oil and gas production in the US, and if the price of oil falls too low then it is not viable for some projects to happen.
But if it goes too high, it creates an inflationary effect and is not good for the economy, hurting demand. So based on that, most industry experts do not expect a major swing either way.
The price of Brent Crude oil last traded at $US74.92 a barrel after hitting a high of $US91.17 in May, then falling last month to an annual low of $US69.19.
Easier access to funding and more cashflow from production could accelerate the trend already playing out involving industry consolidation by way of mergers and acquisitions.
It throws the spotlight back on Australian industry giants Santos and Woodside at a time speculation has been mounting that Woodside may be taking another look at its target that it considered buying last year.
Woodside entered talks with Santos for a $24bn buyout deal in late 2023, but the two companies could not agree on price and other terms, and the Santos project GLNG was said to be a particular stumbling point.
Earlier, BP and Chevron were speculated to be weighing a deal to buy Woodside, although most believe a deal would never gain Australian government approval.
Yet now many think big US energy groups may embark on deals with other major players in their home market.
The election result would likely benefit Woodside, which operates in the US.
Meanwhile, there’s been speculation for some time that Santos has been open to a buyout, but there had earlier not been major global suitors interested in taking out the energy player.
Perhaps that now changes with a shift in the political dynamics.
The $22bn Santos’ share price is down more than 8 per cent in the past year – last trading at $6.73 – while over five years it is down 17 per cent.
However, in the past year the $45bn Woodside Energy’s share price has fallen 29 per cent, last trading at $23.79.
Coal price not right as Kestrel mine owners seek $4.8bn pay dirt
The owners of the Kestrel coal mine will have to convince buyers to pay about $4.8bn for the mine, but the coal price has fallen about 20 per cent since it was first set to hit the market.
St John of God in discussions over Healthscope leases
The not-for-profit St John of God Health Care has discussed with Healthco Healthcare and Wellness REIT taking over some real estate leases from tenant Healthscope.