In recent years, Africa and other developing markets have been a
major focus for a significant number of small/mid cap E&P
companies. However, with oil prices at their lowest for over five
years, and indications that they may stay at this level for some
time, E&P companies and the governments of the countries where
they conduct their exploration and production activities are now
assessing their options.
For small/mid cap players the prospects for raising substantial
capital either through debt or equity financing are extremely tough
or non-existent. At the same time, E&P companies are bound by
the work commitments agreed to in their contracts with host
governments (in most cases production sharing contracts (PSCs)),
and perhaps budgets approved before the extent of the price fall
was known. Unsurprisingly, insolvency and consolidation in the
sector is now occurring as companies face the possibility of not
meeting the PSC conditions and the prospect of their
