NEW YORK –- Last year’s record highs for crude oil, low interest rates and an abundance of private equity money created the perfect climate that spawned 485 mergers in the energy sector — the most in 16 years and deals worth a total $82 billion.

Now, says sources, analysts and investment bankers are opining those conditions are continuing and will continue to feed mergers in 2007.

They predict, said one reporter, that the big oil and gas companies faced with aging oil fields and limited access to new sources of oil in places like Venezuela, Russia and Saudi Arabia, will target smaller companies as a way to boost their oil and gas reserves.

Meanwhile, smaller companies that specialize in production or oil services will look for tie-ups to cut costs and boost production to bring in more oil while prices remain high.

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What companies might be tempting takeover targets?

According to CNNMoney.com, experts say given the current political climate in the U.S., further consolidation among big U.S. oil companies like Exxon, Chevron or ConocoPhillips is unlikely.

More like are link-ups in the natural gas sector, especially with energy prices high and global warming on everyone’s mind.

One energy analyst said big gas companies like Devon, Apache, Anadarko, XTO, Chesapeake or EOG could either buy one of their competitors or be targeted themselves by a larger global company like BP.

And smaller companies like Range, Noble or Pioneer could be acquired by a larger competitor.

Another analyst said other producers prime for takeover could be those that compete in regional markets.

Still another analyst said there’s also the possibility of a public firm going private.

Editor's note:
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