Beware of risks in investing in sizzling oil and gas

THE oil and gas (O&G) space is sizzling and there’s no sign of it cooling off any time soon. There are deals aplenty being made. Just this week StarBiz reported that exploration giant Murphy Oil was looking at hiving off stakes in its assets in the country at a whopping price of some US$2bil to US$3bil (RM6.62bil to RM9.93bil).

Any local listed company buying these assets would see itself being transformed into a major O&G producer, overnight. The question of course, is whether one can afford such a price tag and whether the returns from that investment will be worth it. Also, the proposed sale by Murphy Oil doesn’t seem to include any management control over those assets.