The major oil companies may look at buying U.S. independents next year, according to Dan Pickering, managing director of Houston-based Pickering Energy Partners Inc. "They're buying back stock, but that's no fun, since production growth is only a percentage or so," he told IPAA and Tipro members recently. "The majors that want to grow may come back and make acquisitions, but not until next year...If one did make a move to buy Devon Energy or EnCana Corp., it will spark a race for the rest." There is still a lot of upstream M&A, in general, to be done, he added. "People are still out there buying. In 2003, a thousand cubic feet of (proved) gas (reserves) cost you $1. Today, you pay $2.75. There's been a dramatic increase in the value of E&P assets, but after a 20% price correction, small-, medium- and large-cap companies look cheap versus going out and buying properties." Anadarko Petroleum Corp.'s acquisitions of Kerr-McGee Corp. and Western Gas Resources Inc. for more than $20 billion this summer "really opened our eyes." For more on this, see the November issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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