Calgary January 10, 2006 – LAWFUEL – The Law News Network – Oil industry executives and investment bankers in Canada expect China and the United States to be the most active foreign investors in Canadian energy resources, including oil sands, in the next 12 months. A survey conducted for Blake, Cassels & Graydon LLP (Blakes) by mergermarket, found that executives in the oil patch are evenly divided about which country?s investors will be the most active, but are unanimous in seeing both China and the U.S. as overwhelmingly the primary sources of foreign merger and acquisition (M&A) interest.
?While China is a relatively small player in the Canadian oil and gas sector today, we are seeing enormous interest from Chinese investors in Canada,? said Craig Spurn, Blakes Partner and head of the oil and gas practice. ?The survey results reflect this intensified interest and the expectation it will translate into much more activity in 2006. It has very significant implications for the oil business in Canada.?
Interest and activity in the Canadian oil and gas industry are expected to continue at unprecedented levels, with 91 per cent of survey respondents saying they believe the level of transactions will increase or remain the same in 2006. Seventy per cent of survey respondents believe there will be a significant increase in private equity transactions involving Canadian oil and gas companies.
Oil sands and upstream conventional are the two areas that the overwhelming majority of respondents see as generating most of the cross-border M&A growth in 2006. The growing attractiveness of the oil sands to domestic and foreign investors is also a relatively new trend. According to Spurn, ?If oil and gas prices remain strong, there is every reason to expect more M&A activity in oil sands projects in 2006. The industry is confident they will. Almost half the respondents think oil and gas prices will increase in the next six months, and two-thirds are confident that the current high prices will be sustained over the long term.
Along with price volatility, the ongoing lack of skilled labour ranked highest on the list of challenges in the minds of industry executives.
The report, Canadian Oil and Gas Insight, surveyed leading corporate executives and investment bankers in the oil and gas industry in Canada in the fall of 2005. The study was conducted by mergermarket, a leading M&A intelligence company, in conjunction with Blakes.