Execs in KPMG survey see more mergers

Nearly one third of oil and natural gas executives in a survey by KPMG LLP expect a high level of merger and acquisition activity in the next 12 months.

Of 384 financial executives polled during March and April, 28% said they expected their companies would be involved in major mergers or acquisitions during the next year.

'When almost 3 in 10 energy executives expect their firms to be involved in a major merger or acquisition, it provides a strong sense of the pressures this industry is facing,' said William Kimble, national sector leader for KPMG's energy and chemicals practice. "
He said the survey indicated that reserves replacement "is causing much anxiety and upheaval within energy companies."

Survey results showed that 83% of respondents listed declining reserves as a serious concern, and 58% viewed the volatility of oil and gas prices as negative.

When asked about the most significant financial issue, 49% cited cost of materials, supplies, and equipment; 20% said general economic conditions; 7% said rising interest rates; and 7% said labor costs.