The Scarcity Driving Deals
The recent surge in M&A activity, exemplified by Exxon’s acquisition of Pioneer, stems from a dwindling supply of high-quality drilling locations, particularly in the Permian Basin. Geopolitical instability further enhances the appeal of stable U.S. operations. As global energy demand persists, securing new drilling sites becomes crucial for sustained production.
“High-quality drilling opportunities truly are limited,” explains Jon Hughes, CEO of Petrie Partners. “We’ve had a good decade of drilling A-plus inventory. There’s still some left, but it’s not as plentiful as it used to be.” This scarcity compels operators to acquire existing assets from competitors, fueling the M&A boom.
Petrie Partners: A Boutique Firm’s Advantage
Petrie Partners’ success, especially in advising on mega-deals like the Exxon-Pioneer merger, can be attributed to several factors. Jim Rogers, a partner at the firm, boasts a long-standing relationship with Pioneer, providing a crucial connection. Furthermore, the firm’s existing relationship with Exxon fostered trust and confidentiality with both parties.
The firm’s boutique nature offers a distinct advantage in maintaining confidentiality, a critical aspect of dealmaking. With a smaller team, Petrie Partners minimizes the risk of leaks and ensures discreet handling of sensitive information. “In the conflicts department at a bulge bracket firm, there are more people that have to know about clearing conflicts to sign up an engagement than we have employees,” Hughes points out.
Petrie Partners prioritizes building deep relationships and providing tailored advice, differentiating itself from larger banks. “We work really hard on one deal and hopefully we get the next deal,” says Mike Bock, CFO of Petrie Partners. “Then that client mentions it to another client. We don’t have to spend a lot of time pitching.” This organic growth strategy underscores the firm’s commitment to client satisfaction and long-term partnerships.
The Legacy of Tom Petrie
The firm’s reputation also benefits from the extensive experience and industry recognition of its non-executive chairman, Tom Petrie. His four decades of experience in global commodity markets and dealmaking provide invaluable insights and credibility. “We compete with the bulge bracket banks,” Bock emphasizes. “This isn’t the first deal where we’ve been on the same side or the other side of Goldman, Credit Suisse, Morgan Stanley—all the big names.”
Navigating the Future of Energy M&A
The current wave of M&A activity is expected to persist, driven by ongoing scarcity and industry consolidation. Petrie Partners is well-positioned to continue its role as a trusted advisor in this evolving landscape. The firm’s deep industry knowledge, commitment to confidentiality, and focus on client relationships provide a solid foundation for future success. “When you look back through history and when [the supermajors] get active, if you’re not paying attention or following it closely, you’re missing the boat,” Rapp concludes. Petrie Partners remains vigilant, ready to guide its clients through the complexities of the energy M&A market.
