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Treasury Strategy & Transformation
Published  13 MIN READ

Drilling Down on Success: M&A in the Oil & Gas Services Sector

Drilling Down on Success: M&A in the Oil & Gas Services Sector

A corporate roundtable hosted by HSBC


Panellists

  • Melissa Cougle, Group Treasurer, Ensco plc
  • OK Azie, Group Treasurer, Baker Hughes Inc.
  • Lance Kawaguchi, MD, Global Head – Corporates, Global Liquidity and Cash Management, HSBC

M&A is critical to many organisations’ growth strategy, not least in the oil and gas industry. As a result, major one-off M&A transactions and/or a larger number of smaller ones is a common challenge for many treasurers. In March 2017, HSBC hosted a flagship event for oil and gas services clients in Houston, USA. The event featured an engaging roundtable discussion, an edited version of which appears below, in which treasurers shared their experiences of M&A, discussing the practical implications of M&A, the challenges, and how to overcome them.

Top Tips: Preparing for M&A

  • Maintain good relationships with key partner banks to preserve access to funding and liquidity, and leverage their experience and new ideas on how best to anticipate and finance M&A;

  • Communicate regularly with the Board and CFO on the group’s financing capacity, including potential impact on debt/ equity ratios, covenants and credit ratings;

  • Maintain robust relationships with credit rating agencies, including communicating regularly on strategy, so both parties understand the impact of M&A on credit ratings;

  • Maintain a register of key information and reporting that is typically required in the case of M&A, including bank accounts, signatories, letters of credit, guarantees etc. and perform regular housekeeping. This avoids delays and additional project risk during M&A integration.