Are Oil Industry Mergers Becoming Less Profitable?


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Authors

  • Samuel D. Barrows Toulouse Business School

Abstract

Are oil industry mergers becoming less profitable? This study evaluates oil industry consolidations that occur during the sixteen-year time frame between 1998 and 2013 to find out. This quantitative study focuses on the stock price total return performance of acquirer companies over a four year horizon for each merger transaction. The portfolios created from these transactions provide for an analysis of the economics of the mergers after full integration of target companies. Four benchmarks are incorporated to provide various economic adjustment factors. There are seven cases presented that show that oil industry mergers are becoming less profitable. Implications are that companies may chase mergers as an easy way to increase returns, but this may not occur. As ever larger companies chase the remaining players and bid up their selling prices, increased returns may not always be the outcome.Keywords: Oil Industry Mergers, 1998-2013, Brent Crude OilJEL Classifications: G15, G34, P18

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Author Biography

Samuel D. Barrows, Toulouse Business School

Mr. Barrows has over thirty years of experience in the energy industry including nineteen years with Texaco.  He worked for fifteen years in the U.S then for over fifteen years internationally including in the Former Soviet Union and the European Union. He is currently a Doctorate of Business Administration Candidate at the Toulouse Business School.

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Published

2018-03-20

How to Cite

Barrows, S. D. (2018). Are Oil Industry Mergers Becoming Less Profitable?. International Journal of Energy Economics and Policy, 8(2), 31–38. Retrieved from https://econjournals.com/index.php/ijeep/article/view/5484

Issue

Vol. 8 No. 2 (2018)

Section

Articles

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