Kevin/all, WSJ is speculating on mergers in the industry.
"As Oil Prices Slide, Merger Fever May Build"
excerpt:
In the much smaller oil service sector,
merger mania appears well under way, after
combinations like Halliburton with Dresser
Industries, as well as Baker Hughes and
Western Atlas. But Strong's Baskir is
looking for consolidation to intensify if oil
prices remain depressed.
Who's vulnerable? Baskir says the off shore
drillers need another round of mergers like
the one seen earlier this decade and that just
about anyone -- Rowan Cos., Global
Marine, R&B Falcon, ENSCO
International -- could be involved. Oil
service stocks are down at least 50% from their highs of a year ago, he notes. With
no expectation of higher crude prices in view, continued consolidation could help
support weakened day rates and slash operational costs.
In particular, Baskir says ENSCO, which is mainly restricted to jackup rigs, would
be a natural fit for the larger R&B Falcon with its relative dearth of jackups. (Jackup
rigs are towed to their position in relatively shallow waters of 3,000 feet or less)
Baskir's fund holds ENSCO shares.
Right now, weak oil prices are likely to keep a lid on most energy stocks. But as
consolidation continues and takeover speculation intensifies, this depressed sector
could find itself in the limelight again over the coming year.
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