As oil prices fall, mergers and acquisitions (M&A) in the industry are likely to increase, according to observers. M&A allows for cost cuts and access to new assets, particularly for large oil companies. The first half of 2015 is expected to be slow for oil company M&A as valuations remain uncertain. Nonetheless, two deals that have already been announced are Halliburton’s $26.5 billion purchase of oil-services firm Baker Hughes and Repsol’s acquisition of Talisman Energy for $8.3 billion. However, some acquisitions have also been abandoned. But as oil-price volatility eases, companies are expected to step up acquisition activities to take advantage of lower prices. Vulnerable companies include US shale-oil companies with weak balance sheets. Takeovers of so-called “second-tier” companies are also considered likely. Possible targets among this group include BG Group, Anadarko Petroleum, Hess and Apache.

Source: Financial Times