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Brought to you by the KPMG Global Energy Institute. 


In this edition of KPMG Global Energy Institute’s Drilling Down, we asked Andy Steinhubl and Chris Click about the recent merger and acquisition transactions in the exploration and production (E&P) sector.


There have been several merger and acquisition transactions in the E&P industry this summer, including EQT Corporation’s proposed acquisition of Rice Energy. What is driving deal flow in this sector?


Recent E&P transactions represent North American producers’ attempt to sustain profitable growth during a period of potentially “lower for longer” commodity prices. Strategic players are focused on establishing and developing core positions—quality assets at scale, allowing them to deploy skill sets and technologies to enhance performance. For example, in commenting on its acquisition of Rice Energy, EQT Corporation stated that the integration of complementary positions in the Marcellus and Utica basins would “drive higher capital efficiency through longer laterals and reduce per unit operating costs through operational and G&A synergies.”[1]


In fact, Roger Manny, the CFO of Range Resources, another Marcellus player, commented that combinations such as the above would likely lead to “more paced, prudent, and rational development” in the Appalachian area, and to a “less frantic boom and bust.” He further stated that a company like Range Resources “with quality assets…for investors who believe in the gas market” would be an attractive party to similar deals.[2]


In addition, some players are utilizing capital to reinforce a specific technical capability. Hence, a “doubling down” on what many already see as a core position or competency can lead to lower costs and a more coherent portfolio story to take to the investment community. The recent reshuffling of oil sands assets from the hands of large independents and majors back to domestic Canadian E&Ps is a great example of this.[3]


Read the full article.


[1] Source: Rice Energy Investor Relations, United States (June 19, 2017)

[2] Source: SNL Financial, United States (August 2, 2017)

[3] Source: Hals, United States (May 1, 2017)

Oil price as an indicator of the new market equilibrium

Most oil and gas companies seem to regard the current oil price i.e. between $50 and $60 US dollars as an indicator of the new market equilibrium for the foreseeable future. A major oil trader indicated that a further increase in the short term may be possible given that a lot of supply was taken off the market by oil companies not making planned investments over 1 trillion US dollars since the price collapsed1. Experts predict that oil companies will cut their investments in upstream on new oil fields by more than 20% by 20202, compared to the level forecasted until the drop in oil prices. This could noticeably reduce oil supply in the market by the end of the decade.


Currently many market investors and players try to understand the trends in the industry, taking into account controversial data from the different parts of the globe. The recent talks on the potential extension to the production cut deal with the OPEC may also lead to increase in oil prices in the mid-term. This deal has resulted in the pullback of around 1.2 million barrels per day of production generated by OPEC countries and approximately half of that figure by non-OPEC parties already3. At the same time, one should not overlook that recent rebound in production in Libya and Nigeria (both exempt from OPEC's November deal to curb output), which could somehow impact the stock, thus, leading to oil price fixing near the forecasted bottom line.

Anton Oussov, Global Head of Oil & Gas and Head of Oil & Gas in Russia and the CIS, KPMG in Russia


TCFD recommendations

The Financial Stability Board's Task Force on Climate-related disclosures (TCFD) presented its final report in June 2017, setting out recommendations for helping businesses disclose climate-related financial information. Whilst the recommendations are voluntary, it could be considered as a basis on which future legislation could be built and so it would be prudent for executives of oil & gas companies to be pro-active and plan for the future today.

The impact of not addressing climate change risks are clear in the mind of investors as evidenced by recent challenges at shareholder meetings, and is likely to become of increasing importance to regulators, lenders and insurance underwriters alike. Major oil & gas producers have begun to take this on board, with Shell and Total S.A. establishing `New Energy' divisions; Shell is planning on spending $1 billion per year on new energies by 20204, whilst Total have stated their goal of achieving a low-carbon business portfolio weighting of 20% by 20355. Whilst the debate of the impact of climate change on business rages on, we expect that implementation of TCFD recommendations to evolve over time and suggest companies stay abreast of latest developments on climate-related financial disclosures.

– Mohammed Chunara, Associate Director, Energy & Natural Resources, KPMG in the UK


Decertification of Iran nuclear agreement will have limited initial impact on oil market

President Trump announced his decision on 13 October to decline to certify Iranian compliance with the nuclear agreement reached in 2015 during the previous administration, but the initial effect on the world oil market should be modest. The issue of certification pertains to the requirements of US law and does not constitute a US withdrawal from the deal or mandate a reimposition of secondary sanctions aimed at curtailing oil exports. While the action sets in motion a 60-day period for Congress, by a joint resolution requiring majority votes in both houses, to reimpose sanctions, that outcome is probably not going to happen. The Trump administration is not pressing for that outcome, and even hawkish members of Congress have indicated that they do not see this as immediately necessary. Trump has the authority to reimpose those sanctions at any time, and the administration's intention is to attempt to pressure Iran for additional concessions on ballistic missiles, the expiration timeframe of the agreement, and other issues. Despite the perception of risk, the crude oil market will be less inclined to price in a premium for notional risks, given the ability of short-cycle production to respond to market prices quickly. So while President Trump's move to decertify has provided only modest support for oil prices, it has set in motion a period in which there will be a very uncomfortable ambiguity about the nuclear deal's future, as well as short-term volatility on headlines related to the issue.


Greg Priddy, Director, O&G, Eurasia Group*

* Guest contributor for October edition

US Sanctions on the Russian Energy Industry

US expanded sanctions in relation to the Russian energy industry. This in substance involves participating or assisting with new energy projects, the most notable one being North Stream 2, a parallel pipeline for additional Russian exports to Germany with a an additional projected capacity of 55 billion cubic meters.

The European leadership generally disapproved of new US sanctions. The European courts meanwhile upheld Gazprom's rights to take up additional spare capacity in an OPAL pipeline, which is a land extension of the existing North Stream 1 underwater pipeline allowing Gazprom to increase direct exports to Germany bypassing transit countries by pumping at close to maximum capacity of 55 billion cm per year.

Read the full report now.

Registration is now open!

We are pleased to announce the 7th Annual Global Power & Utilities Conference is now open for registration! This year the conference will take place in beautiful Brussels, Belgium on 8 November 2017 at the Marriott Hotel Grand Place from 8:15am – 5:00pm.

We would also like to take this opportunity to invite you to the pre-conference complimentary dinner being held at De Warande an exclusive business club in Brussels. The dinner will be held on the evening of 7 November 2017. Once your registration is complete a conference representative will reach out to confirm your attendance at the dinner. Transportation to and from the event will be provided. Please book travel and hotel accommodation accordingly should you wish to attend this exclusive client dinner.


Registration information

Register now to join fellow energy executives to discuss the future of the industry. NOTE: As a client of KPMG, you will not be subject to a registration fee to attend the conference, and when booking hotel accommodation you will be provided with a preferred conference rate. Room rates will be €229EUR/night, including breakfast from 5 November to 9 November. Any hotel rooms outside these dates will be subject to market price.

Once registered, to book your accommodation while attending the conference please click here.

Please book travel and hotel accommodation accordingly.

Register Here 



Current panelists

This year we are honored to host our panelists, to name a few:



Miguel Antoñanzas, President and CEO, Viesgo

Julio Castro, Executive Vice President Regulation, Iberdrola Group

Dr. Despoina Chatzikyriakou, Sr. Engineer, Technology Trends Analysis Division, Toyota

Tony Cocker, CEO, E.ON UK (2011 – 2017)

Steve Holliday, Chair, Senvion and CEO, National Grid (2007 – 2016)

Samuel Leupold, CEO, Wind Energy, DONG

Dr. Stefan Niemand, Head of Electrification, AUDI AG

Elke Temme, Senior Vice President, emobility, innogy SE

Jon Vatnaland, Executive Vice President, Corporate Staff, Statkraft

Andy Vesey, Managing Director and CEO, AGL

Roy Williamson, Head of Mobility Task Force, BP.


For more information and a full list of conference panelists click here. More information will be shared as the conference approaches.

In case of any questions please feel free to contact Please continue to visit for conference updates. For information on last year’s conference or to view the 2016 conference report which summarizes and highlights the key conference takeaways click here.

We look forward to welcoming you to the conference in Brussels this November.



The KPMG Global Energy Institute cordially invites you to attend the 6th annual KPMG LATAM Energy Conference on Thursday, August 31, 2017, at the St. Regis Hotel in Mexico City, Mexico.

We are excited to announce that Pedro Joaquín Coldwell, Mexican Secretary of Energy, who will provide a keynote address the importance of the Energy industry to Mexico.

The energy industry in Latin America is experiencing volatility that includes challenges in the areas of profitability, efficiency, investments, and adoption of new technologies. This invitation-only event will bring together energy specialists and leaders to analyze challenges facing the industry and to identify business opportunities.

The KPMG LATAM Energy Conference will include topics on:


Energy and structural reforms

The future of the energy industry in Latin America

Anti-bribery and anti-corruption practices

Taxation in the energy sector

New electricity generation projects

Bilateral relationship: Mexico and United States.

We hope you will join us and be a part of this great event!


August 31, 2017


8:00 a.m.–7:00 p.m.


The St. Regis Mexico City Paseo de la Reforma No. 439 Colonia Cuauhtémoc, Mexico City


This conference is by invitation only. Please register early as space is limited.


Registration: 8:00 a.m.–8:30 a.m. Conference: 8:30 a.m.–7:00 p.m. Download the detailed agenda

Registration and questions

If you have any questions, please contact Julio Espinosa at

About the KPMG Global Energy Institute

The KPMG Global Energy Institute has been established to provide an open forum where industry financial executives can share knowledge, gain insights, and access thought leadership about key industry issues and emerging trends.

We look forward to welcoming you to the conference in Mexico City this August.

The KPMG Global Energy Institute is proud to announce the release of the 2017 KPMG Global Energy Conference Recap. Read Now.

The recap highlights trends and issues promoted throughout the conference, with breakout, keynote, and general sessions.

This year’s keynote speakers shared valuable knowledge and insights into personal life and business. Former Speaker of the U.S. House of Representatives John Boehner told stories of his time in office and provided his opinions on the current political climate, possibility of a balanced budget, and President Trump’s first 100 days in office.

The conference also featured a conversation with highly decorated NASA astronauts and retired U.S. Navy captains, Mark and Scott Kelly. The brothers shared tales of hard work and persistence. Their stories of inspiration provided participants with leadership advice and strategies for “doing the hard things” in life as well as in business.

Additionally, as a leading pioneer of the sharing economy and founder and former CEO of Zipcar, Robin Chase, focused on a collaborative economy and the big picture perspective on creating a sustainable way of life in the 21st century.

Click here to view a brief video recap of the 2017 Global Energy Conference.We invite you to access the recap to learn more about the trends impacting the energy industry and to read some key insights from our entire spectrum of speakers. Read Now.

Planning is under way for the 2018 conference, taking place on June 6–7, 2018 in Houston, Texas. We look forward to seeing you there.

Tightening in Asian Middle Distillate Storage Markets

The current low crude oil price environment, in conjunction with the response from Asia's refineries, has bolstered refined product inventories. In contrast, strong buying interest from India, combined with tighter Chinese export quotas has seen a short-term jump in demand in South East Asia. With the above market conditions reflected in the middle distillates forward curve, the recent sustained backwardation has become more pronounced.

Many traders have responded by moving their volumes out of landed storage tanks, as the spreads have been overtaken by their inability to recoup their storage costs.

This comes at a time when alternative storage options are being considered: the trend of traders using oil tankers due to their relatively low cost (as a result of the compression in freight rates) and intrinsic flexibility.

With many traders contemplating reducing the storage lease volumes/tenors, or not renewing their storage contracts, tank owners and operators are likely to continue to face downside pressure on storage rentals rates. With the negative carry in the forward curve, tanking companies, especially those who have recently completed new storage projects in the Singapore-Malaysian Straits, will need to carefully manage their funding arrangements, to avoid running out of cash in a funding environment that is still cautious of oil-linked industries.

- Oliver Hsieh, Director, Commodity & Energy Risk Management, KPMG in Singapore


Private equity in exploration and production

The first half of 2017 has seen a boom in exploration and production (E&P) deal activity, with M&A spend reaching levels not seen in recent years, with a general view in the market place that assets are being picked up by the right buyers; with challenging assets moving to specialist operators in the North Sea, and oil sands moving to companies with specific technical expertise in the US. Private Equity (PE) has played an important role in re-igniting this deal activity, providing the much needed competitive tension, and innovative deal structures, which has helped to close the buyer and seller expectation gap, and deliver the finance needed to ensure deals are done.

“Within the North Sea specifically, we have seen the market has started to understand the attraction of E&P to Private Equity, and therefore we have recently seen PE succeed in a number of deals, most notably Shell's $3.8billion sale of their North Sea package of assets. PE's approach into E&P appears to be less about the high leverage, cost cutting and quick exit model that they often used in other industries. It is more of a longer term bolt-on model to build balanced, complimentary portfolios of assets and strategic plays, with cash extracted through exit rather than in the `ownership' years. During 2016, we saw over $60 billion of equity capital raised for natural resource deals across 74 funds, and this alongside the longer term build and buy strategy suggests that PE will be around, at least in natural resources, for many years to come.”

- Natalie Wansbury, Director, Oil & Gas Practice, KPMG in the UK


To continue reading the Market Update click here.

US perspective on the market

If the last few months of 2016 were characterized by cautious optimism, then the first few months of 2017 can be characterized as a small sigh of relief as all signals point toward a slow but steady recovery for the US oil and gas industry. Forecasted capital spending is on the rise for 2017. According to a recent report released by IHS, US E&P Independents’ 2017 planned capital spending is forecasted to increase by 45% for this year. For the E&P companies analyzed in the report, all have reported plans to reverse last year production declines. The increased capital spending is resulting in higher rig counts. For the thirteenth consecutive week, the US rig count increased yet again – reaching its highest level in two years. We also continue to see robust merger and acquisition activity as companies continue to rationalize and optimize their portfolio. In the Permian basin alone, upstream deal flow continued to accelerate during the first quarter of 2017. Over $18B in transactions have already been announced in the Permian – representing over 70% of the full year of 2016. Still, the S&P Energy Sector ETF (XLE) is down more than 6% 2017, while the S&P 500 is up 5% - potentially representing a great bargain for long-term investors.  To continue reading, click here.

While the above factors are all positive indications towards a continued industry recovery, two questions remain. What will 2017 bring for oil prices and how will this recovery (assuming we are trending towards a recovery) translate into jobs for the industry? While the most certain aspect of oil price is the uncertainty, there are some signposts that might give an indication of where prices may be headed. The US Energy Information Administration (EIA) recently lowered the outlook on its crude-price forecast with WTI crude of $54.24/bbl but raised 2017 forecasted production output to 9.22 million barrels a day. However, the IEA indicated that global oil supply and demand appear to be rebalancing after more than two years of oversupply. One key question that remains is if OPEC members will be willing to extend production cuts beyond the June expiration. With Saudi Aramco scheduled to IPO in 2018, the Saudi royals are certainly incentivized to continue to curb output that will ultimately draw down inventories and drive higher prices in the market. Finally, although Syria’s contribution to the global oil supply is relatively small at an average of 30,000 barrels per day, any military actions involving the Middle East are bound to cause some uncertainty in commodity market.


As for the impact on the oil and gas job market, it is still too soon to predict. Bloomberg estimates that the oil price collapse eliminated 440,000 jobs, and anywhere from one-third to one-half of those jobs may never come back. The reasons for this are multifaceted – companies were forced to find ways to operate much more efficiently during the downturn, and these efficiencies will carry over into the "new normal." Asset portfolios have been optimized and many companies are now operating with a smaller, more synergized footprint. Last but not least, emerging technologies such as robotic process automation, cognitive, and cloud computing are being rapidly adopted and providing significant efficiency and cost benefits eliminating the need to scale the new organization in a "one-for-one" model compared to years prior to the downturn.


By and large, a swift recovery in oil prices remains unlikely but there are positive signs that things may be headed in the right direction. Just don’t call it a comeback … yet.


Angie Gildea, Partner, Americas Oil & Gas Lead, KPMG in the US


To continue reading the Market Update, click here.

KPMG Global Energy Institute

Join fellow energy executives to discuss the future of the industry at KPMG’s 15th Annual Global Energy Conference (GEC) on May 24–25, 2017 at the Royal Sonesta Hotel in Houston, Texas.

This year’s conference features an outstanding program examining industry opportunities, debating the future of U.S. and world markets, and collaborating on ways to succeed in the new energy landscape.

The GEC is designed for industry leaders to share ideas and gain insights into the current issues and emerging challenges that will impact the energy industry in the coming year.

Guest speakers

Keynote speakers at this year’s GEC include John Boehner, former speaker of the U.S. House of Representatives, and Mark and Scott Kelly, highly decorated NASA astronauts and retired U.S. Navy captains. Robin Chase, a leading pioneer of the “sharing economy” and founder and former CEO of Zipcar, also joins us as a featured speaker.

John Boehner

Former speaker of the U.S. House of Representatives (2011–2015)

Robin Chase

Leading pioneer of the sharing economy; founder and former CEO of Zipcar

Mark and Scott Kelly

Highly decorated NASA astronauts and retired U.S. Navy captains




For more information about KPMG’s 15th Annual GEC, please visit our Web site,

The Network Integrator Journey Part 2 – Management Challenges Facing Network Integrators that utility and energy industry leaders are increasingly evaluating this evolution from and enterprise business value viewpoint. The characteristics of the Network Integrator are distinctly different from the traditional distribution company and requiring new thinking.


Please view the supporting brochure and Plugged in supporting part 2 of the Network Integrator

Click here to view part 1 of the 3 part series, The Network Integrator Journey: - Part 1 External Forces on Utility Operating Models 

UK Government announces review of North Sea tax rules

Earlier this month we saw the UK government announce a forthcoming review of the North Sea tax rules to help encourage fresh UK and international investment into the UK continental shelf (UKCS). The Government is focused on Maximising Economic Recovery (MER) of the remaining reserves in the North Sea, and it plans to create an expert panel to identify ways of making it easier to get North Sea assets into the hands of those operators that have experience of operating late life assets effectively. One issue that is potentially hampering deal activity around late life assets in the North Sea is the level of tax relief available on decommissioning once the asset ceases production. North Sea decommissioning costs are forecast to exceed £50bn during the next four decades, with almost half the liability to be met by the Treasury through tax relief, according to Wood Mackenzie. The value of the tax relief available on each asset for decommissioning will be dependent on the amount of tax the owner has paid during the life of the asset, and this currently can’t be automatically transferred to the new owner when the asset is sold. By looking at this potential issue, the UK Government is hoping to ensure the UKCS remains an attractive prospect for new entrants and MER can be achieved.

Market Update: Oil and Gas – February 2017

Looking for clarity

Brent prices seem to have reached critical price levels. Latest price action does not show a clear picture about what happens next. Over the last 2 months prices moved more or less sideways, around the $55 USD per barrel price level and lost the upward momentum it had in November 2016. The $55 mark currently acts as a strong resistance. A monthly close above $60 would open the door for further price upside. However, the short-term price action looks more like a triple top which could lead to a price correction back to $46-48, the level where the actual medium-term uptrend comes in to play. A monthly close below $44 would indicate further price pressure back to $30-35.

Read the full report now


KPMG LLP’s (KPMG) Global Energy Institute is pleased to announce the release of part 1 of The Network Integrator Journey: External Forces on Utility Operating Models.

This three-part series features a Plugged In article and video on the concept of the network integrator. KPMG's Plugged In articles allow subject matter professionals to address key issues and trends that are driving and shaping power and utilities companies today.

The Network Integrator Journey three-part series is a follow-up to the original article, “The Utility as the Network Integratorand will feature a Plugged In article and video that highlights the opportunities, challenges, risks, and other business issues that traditional electric companies (distribution companies) will likely face as they transition from the current state to the concept of the network integrator. The series, which kicks off today with Part 1, will be released over the coming months, and will help define key steps that utility companies need to take to achieve the desired future–state companies

The Network Integrator Journey – Part 1: External Forces on Utility Operating Models highlights two key driving forces of the emerging value chain—technology and regulatory pressures—and how these changes are confirming the evolution of utilities into network integrator.

The Harvey Nash/KPMG CIO Survey received more responses than any other IT leadership survey in the world. In 2016, more than 3,300 CIOs and technology leaders across 82 countries shared their views and experiences. The IT structure within an organization is changing and leaders have to stay innovative. In this edition of the KPMG Global Energy Institute’s Drilling Down, Mark Tackley-Goodman, Principal-Advisory, discusses some of the implications arising from the challenges facing the industry and how CIOs can make room to support the type of technology transformation that will be required to drive improved business results.


Read more here

Plugged In: Transforming the power and utilities IT organization

KPMG Global Energy Institute is pleased to announce the release of a new edition of Plugged In: Transforming the power and utilities IT organization. This piece is centered on the 2016 Harvey Nash CIO Survey results. We asked subject matter specialists Paul Fritz, Tim Gunter, and Tom Pankey to address key issues in the power and utilities sector based on survey results. They gave their insights on how this can impact the power and utilities industry.

The power and utility industry’s overall landscape is undergoing significant change driven by abundant gas supplies, disruptive technologies, distributed generation, and escalating customer expectations.