Oil and Gas

Oil companies face 'banner year' for activism: Pro

Oil's bottom in sight: Pro
Oil's bottom in sight: Pro

Oil prices have slid near their bottom point, opening the door for increased shareholder activism in small-to-mid-sized public oil companies, industry professionals said on Friday.

"What you're going to see in the market in 2015 is an immense amount of activists turning their guns toward oil companies," said Chad Brownstein, CEO of Rocky Mountain Resources, on "Closing Bell."

Buoyed by high prices and a shale boom, oil companies remained largely "immune" to significant overhauls in the last five years, Brownstein said. But as U.S. crude futures have plunged lower—ending below $55 a barrel on Friday—smaller oil companies have grown more vulnerable, particularly to hedge fund influence.

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"It's going to be a banner year for the hedge funds in the activism space," Brownstein said.

Floor hands work on an oil rig in the Bakken shale formation outside Watford City, North Dakota.
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The most common forms of activism in oil companies will include pushes for consolidation, asset sales and management changes, he added.

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Aside from activist shareholders, acquisitions will also shape the oil landscape if the low-price environment continues, said Carl Larry of Oil Outlooks and Opinions. Large companies could begin swallowing up smaller shale businesses if prices hold steady or keep sliding, he said.

"They're at an attractive price here, soon, if things keep going this way," Larry said.