Merger and acquisition activity is expected to increase in Canada’s oilpatch this year, as energy executives take a brighter view of their sector’s prospects, according to a study released Wednesday. But the positive outlook is dampened somewhat by cost escalation for labour and equipment, the Ernst & Young report said.
In 2010 Canadian energy M&A activity was dominated by oil sands. While the $4.65bn Sinopec-Syncrude deal was the largest the total the number of oil sands transactions tripled.
About 23 per cent of those surveyed expected financing would be readily available to fund their growth plans, and 33 per cent already believed access to financing wasn’t a problem.
“I do think financing is available out there, but people aren’t falling over each other to give it away,” said Holroyd, noting private equity players are playing a bigger role.
Last week MINING.com reported how a spike in labour costs could put a drag on oil sands investments:
According to a new outlook from the Construction Owners Association of Alberta, the expected future labour need for 2011 is up significantly from this time last year. At the same time, the Construction Sector Council recently published a forecast that suggests that future trades industry labour supply will be limited.
An 2011 report by Peters & Co., an oil sands investment house, predicted investment in Alberta’s oil sands was set to reach a staggering $180bn over the next decade – 20% more than was spent during the height of the last boom.