The significant challenges facing the industry are themselves drivers of M&A activity. In particular, in this environment of lower demand for their products and services, companies are having to adapt their operating models and extract themselves from unprofitable operations and/or territories.
Since averaging above $100 a barrel for most of the period between 2008 and 2014, prices have more than halved over the last two years in response to the US shale revolution, leading to a global glut.
M&A within the oilfield services industry remains particularly active driven by market pressures, the need to access new innovation, and company survival. Consolidation among leading players keen to mitigate the effects of the low oil price, as well as improve their global reach and acquire new technologies, remains strong.
We look at recent deals in the drilling, services, testing and inspections, and automation sub sectors including, PE firm American Securities acquiring Ulterra Drilling Technologies LP from ESCO Corp. Ulterra is a leading manufacturer of polycrystalline diamond compact (PDC) drill bits used in the construction of oil and gas wells. Ulterra is now the second largest PDC company in the US.