The story leading to a huge energy industry merger sounds familiar: Oil prices plunge to record lows. OPEC fails to implement sufficient measures to curb oil production. The industry braces for the other shoe to drop. The largest deal in the energy industry is announced. But wait, that was the 1999 merger between Exxon and Mobil valued at $80 billion, the largest merger in United States history, occurring at a time when the price of crude oil plunged below $11 a barrel. Of course, that was also before emerging technologies created the fracing boom that boosted our rig count, along with the related oil service work performed by the big triangle: Schlumberger, Halliburton and Baker Hughes.
Tech Trumps
It is easy to assume that the recent drop in oil prices resulted in the Halliburton-Baker Hughes deal, but that is far from the truth. Although the current four year low in oil prices indeed sped up the process (lowering the price tag by reducing Baker Hughes' market capitalization by $10.4 billion between late June and mid-November), the merger talks between those companies has been rumored since at least 2006. Halliburton's CEO David Lesar also recently indicated that "We would have done this transaction even if oil prices were going up".
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