But he talked more about the strategic drivers in the oil and gas industry today: geopolitical events, higher oil prices because of the difficult of finding new oil reserves, rising nationalism among oil-producing countries and much heightened environmental sensitivities. "This is not your parents' oil industry," he said. Still, M&A activity in the industry is brisk: He said transaction volumes have already exceeded last year's total. "I have my doubts whether it will continue, but it won't go back to the late 1990s because of geopolitical forces," he added.
He noted that the rise in master limited partnerships are fueling part of the deal flow ("In our capital markets we do it until we kill it," he said) but he's also seeing the first signs of international oil companies coming back to North America — remember BP plc buying Amoco and Arco — mentioning Eni SpA, Statoil ASA and Asian oil companies.
He also said his prediction that oil prices would hit $120 per barrel was taken out of context in a recent story by The Wall Street Journal. What he really meant was that it would take $120 oil to trigger demand shifts, which might stop oil prices' upward trajectory. "I really meant that $120 to $150 oil would create enough of a shock [to affect demand]," he said. "It would take a big price to make a big adjustment." Would it also stop dealmaking? — Claire Poole
