Already Devon Energy President John Richels has been quoted as saying he expects consolidation among mid-sized North American E&P players, and Chesapeake has announced plans to sell up to $3 billion of its unconventional gas assets.

A recent Forbes/Reuters report indicates that the merger and acquisition (M&A) market might get a shot in the arm from the financial crisis and the ensuing drop in crude prices. Companies like Chesapeake are already feeling the pinch, and another recent report mentioned that BP might be very interested in Chesapeake’s natural gas holdings in the Barnett Shale.

BP is not the only ogler. “Oil majors such as ExxonMobil and Royal Dutch Shell Plc will likely use the crisis to accelerate their strategic push into North American gas production and the Canadian oil sands,” the report states.

Oil prices are currently half what they were in July, when they reached a record US $147/barrel. This drop has affected all companies and their stock prices, but smaller companies are not able to weather the storm as well as their larger counterparts. “This is because the E&P players are more leveraged to crude than the oil majors, which have refining, chemicals, and retail units, and because, with low production levels or noe at all, the E&P firms are more reliant on debt funding,” the report states.

Already Devon Energy President John Richels has been quoted as saying he expects consolidation among mid-sized North American E&P players, and Chesapeake has announced plans to sell up to $3 billion of its unconventional gas assets.