Recent events support the view that the latest upstream M&A push is in full swing, according to The Land Rig Newsletter’s Biweekly Report
. Of course, the elephant in the room here is BHP’s proposal to acquire Petrohawk for $12 billion: a shot across the bow of the other non-U.S. international oil companies looking into U.S. unconventional plays that says, in effect: Joint venture deals with U.S. independents won’t suffice any more vs. equity deals. The JV deals clearly have accelerated drilling in the key unconventional plays. The big carries in those deals have enabled a lot of E&D capex and drilling that would not have happened at the same pace otherwise. But it’s a good question whether the same thing will happen with outright company acquisitions. The 1990s merger boom actually reduced drilling, chasing some E&P capex out of the industry as companies struggled to service debt loads while digesting their acquisitions. It’s doubtful that will happen again, but the current M&A surge leads one to think that a repeat of the JV-induced drilling spurt isn’t a slam-dunk scenario.