Oil company “minnows” with “big fish” ambitions but facing falling commodity prices and a credit crunch are turning to each other to develop oilfields or are being bought up, judging by a survey of farm-ins and takeovers.

No fewer than 60 oil industry farm-ins, company acquisitions, mergers and partnerships heading for takeover have been reported since the beginning of September 2008 alone.

With banks, mutual funds and investment firms all experiencing bankruptcy, billions in investor withdrawals or buy-outs by governments, oil companies and the supply chain have found each other.

Examples are many, but standing out is the case of First Calgary Petroleums. After months of seeing its share price fall from over $20 to just over $2 on credit fears, the Board of First Calgary Petroleums — faced with a need to find hundreds of millions of dollars to fund its first Algerian development, and perhaps its last — recommended shareholders accept an offer from Italian oil company ENI which offered a premium over the basement share price.

Shareholders meet 14 October 2008 to discuss why their world-class Algerian oilfield is being handed over to a supermajor with contractors and long-lead items already lined up.

The bitter bill — surrendering dreams of independent wealth — is being swallowed right across the industry, although some are finding ideal partners. Last week, Danish oilfield automation player Rovsing found a key partner in sensor giant Yokogawa in a partnership deal expected to help them both fend of financing woes and rivals.

Among the oil company minnows, the farming into both producing and prospective licenses has been the preferred way to find needed funds.

German gas company Verbundnetzgaz is growing its offshore field stakes in Norway despite the prohibitive cost of drilling some deepwater wells here — usually some $60 million. The company is sharing the cost of its first four exploration wells off Norway in 2009 with operators Total, Endeavour and oil company Det Norske Oljeselskapet.

“It’s cheaper in the short term than paying $100 million to get in on a producing license,” a source said.

Tags: First Calgary Petroleums