Haynes and Boone's Newsroom

Bill Nelson in the Houston Business Journal: When less can be more
08/23/2011

Integrated oil and gas companies’ discovery that they can unburden their fast-growing exploration and develop businesses by spinning off other divisions is pointing the way toward similar moves by more industry players.

The recent spate of integrated companies following the trend, since Houston-based Marathon Oil Corp. unveiled plans to split in January, are responding to investor desire for more pure-play action, analysts say…

Bill Nelson, a mergers and acquisitions attorney in the Houston office of Haynes and Boone LLP, said the changes in oil and gas business models reflect other methods used to revalue assets of noncore businesses.

For example, some oil majors have in recent years sold off service stations and other assets. Their products are still sold through the stations, but by using franchise and licensing agreements, the E&P companies no longer have the burden and expense of operating the stations, Nelson said.

Excerpt from the Houston Business Journal, Aug. 19, 2011. To view the full article, click here (subscription required).