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Potential mega-deal meets rumor mill

A potential monster-sized acquisition that would even make Halliburton blush is soon to be coming to a water cooler near you.

Norwegian-based oil giant Statoil ASA (NYSE: STO) is tossing around the idea of potentially acquiring Houston-based EOG Resources Inc. (NYSE: EOG) in a deal that could be worth over $50 billion, according to the Houston Business Journal. That dollar amount would trump the $35 billion deal Halliburton made when it acquired Baker Hughes.

The acquisition is just speculation at this point, as neither company has hinted at or has been willing to comment on the rumor. Analysts believe that the deal would make sense for both parties, as Statoil continues to grow its Houston presence and continues to expand its production in U.S. shale.

Raymond James & Associates managing director of E&P energy research Andrew Coleman says that now, more than ever, would be a fitting time for EOG executives to agree to a buyout. EOG Chairman and CEO Bill Thomas as well as EOG President and COO Gary Thomas are both into their 60s. Combine that with the current state of the oil market and the potential deal is making more sense by the minute for EOG executives.

“They’re not getting any younger,” Coleman said. “The management team is at an age where retirement would seem to be a pretty good option. That said, once you’re in the corner office, you kind of like the view.”

Coleman added that he believes the potential deal would be “unlikely” to happen. On March 13, EOG traded at about $85 a share with a market cap of $46.6 billion. Coleman says that for Statoil to even have their phone call returned, a 25 percent premium would be needed as part of the deal.

4 comments

  1. The rich get richer, while the middle class gets laid off during this downturn. Boo.

  2. 50 billions is undervalued for COG

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