Fall in oil and gas sector fuels takeover forecast

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Further takeovers in the oil and gas sector have been forecast amid tightening credit markets, a report today predicts.

Ernst & Young (E&Y), the accountancy firm, said that just 15 Aim-quoted oil and gas companies – some 13 per cent of those on the London junior market – had raised funds in the final quarter of 2011. The £1 billion or so raised across the year was 47 per cent below the 2010 figure.

The firm’s latest Oil and Gas Eye index, which monitors the movements of Aim-quoted oil and gas companies, rose by 24 per cent in the fourth quarter, but its performance over the year as a whole was described as “disappointing”.

A fall of 22 per cent compared with gains of 123 per cent and 47 per cent in 2009 and 2010, respectively, E&Y noted.

Ally Rule, a partner at E&Y in Aberdeen, predicted further mergers and acquisitions in the sector.

“Many junior oil and gas companies are going to find fundraising – whether debt or capital – increasingly challenging,” he said.