“Falling oil prices slowing mergers”
The rapidly declining price of oil is hurting dealmaking in the Oil Patch.
But new deals started slowing dramatically during the past few weeks. Declining oil prices have affected energy stocks. In many cases, the math no longer worked.
Thompson & Knight partner Holt Foster said that “$80 a barrel is the magic number” because that is the bottom price many of these companies use in their accounting models.
“It is extremely expensive to drill and if oil drops below $80 for a sustained period, many production companies will lay down the rigs,” he said. “If oil drops to below $75, we could see some fire sales.”