The PVAC-DNR merger was cancelled on Friday, reflecting the challenge associated with 1) low equity prices and 2) combining businesses that aren’t really complementary.  Eagleford + CO2 equals…… more confusing.

Better yet, companies with similar portfolios (Delaware-Delaware, Eagleford-Eagleford, Bakken-Bakken) and “upside kickers” feel like a better merger strategy but overcoming the memory of stock prices last summer is a powerful disincentive for management teams.

Nonetheless, oil is almost $60 and the bulls are out and equity prices aren’t reflecting any euphoria about price.  I continue to be surprised at the lack of additional mergers but like lemmings, when the first runs the cliff, the others will follow.

#hottakeoftheday