The fast pace of M&A transactions seen in 2006 may not be sustainable this year, absent the many large deals announced as Anadarko Petroleum Corp. restructures, according to Randy King, managing director of Merrill Lynch Petrie Divestiture Advisors. He spoke recently to Houston Energy Finance Group members. The capital markets recognize that energy fundamentals are still good, he said, but the stock market's expression of that-higher equity values-has varied over time, so there is still some misunderstanding. The market recognizes energy problems that could portend success for U.S. companies as commodity prices go higher: limited access to resources, greater geopolitical risk, high North American production declines and the heightened competition from national oil companies. But the energy sector makes up only 10% of the Standard & Poor's 500, versus 12% in the late 1980s and 20% in the late 1970s. For more on this, see the April issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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