An Econometric Analysis of the Effect of Brent Crude Oil Price on M&A Activity on the Norwegian Continental Shelf

Henny Tanberg Hansen & Hilde Egeland Olsen

Student thesis: Master thesis

Abstract

When the Norwegian oil adventure started in the late 1960s, large international companies dominated the player landscape. Through mergers and acquisitions (M&A) the player picture has developed as the shelf has matured, along with changes in market conditions, regulations and framework (Norwegian Petroleum, 2018a). This study aims to determine how the oil price affects the M&A activity on the Norwegian continental shelf from 1998 to 2018. The thesis is targeted at players in the industry, academics, regulators and other parties related to the industry. The conclusion on how the oil price affects transactions can be useful for companies engaging in transactions and regulators effort to monitor the M&A activity on the Norwegian continental shelf. Furthermore, the thesis can inspire other academics to further develop the research area by expanding the knowledge both on the Norwegian continental shelf and globally. Previous literature shows that the oil price has a significant and positive effect on M&A activity in the oil and gas industry. However, the investigation of the relation remains unexamined on the Norwegian continental shelf. This thesisĀ“ contribution to the extensive literature on M&A activity in the oil industry is therefore the examination of the oil price influence on the Norwegian oil and gas sector, with focus on M&A on the Norwegian continental shelf. The thesis is data driven and based on statistical analysis, where time series analysis is applied to study the relationship between the oil price and transactions. Through this econometric analysis, there has been established a relation between the oil price and the number of transactions on the Norwegian continental shelf. Association between the variables has been established through contingency table analysis, it has been found that oil price Granger-causes transactions and the regression analysis has showed a significant and positive impact of the oil price on the M&A activity on the shelf. The results from this thesis indicate that the Brent crude oil price has an impact on the M&A activity on the Norwegian continental shelf, and that the effect is positive.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages116