Falling Prices Make Consolidations in the Junior Oil and Gas Sector Inevitable - Scotia Analyst
Source: Seeking Alpha (10/16/08)
A steep decline in share prices, weak commodity prices and tight credit markets provide the perfect conditions for consolidation in the junior oil and gas sector, says Scotia Capital analyts George Toriola. He points out in a recent research note that several junior oil land gas companies have seen share price declines of 70%, while the TSX S&P energy index has dropped 50% since the beginning of the the third quarter.
Mr. Toriola says in a note to clients:
We believe recent market activity probably accentuates the cost of capital differences between oil and gas companies. In our opinion, companies with a cost of capital advantage probably emerge as consolidators...