Drill, baby, drill (from TheDeal.com)(subscription required)

....Equipment companies are also on the prowl for add-ons. Smith Materials and Equipment Co., Halliburton Co. and Cameron International Corp. are all on the hunt for targets, according to Mike Parham, a banker at McGladrey Capital Markets.

It's not entirely a zero-sum game, however, as not all majors that have cut back on drilling are looking to buy. Many find themselves in the same predicament as the middle-market companies mentioned above. Chesapeake Energy Corp., for example has become a seller largely as a result of its declining stock price, says Parham....

Parham also anticipates private equity will return to oil and gas midmarket M&A. "I think [in] January or February you're going to see a lot of private equity funds jump back into the market," he predicted. "I think there are going to be a lot of going private transactions."

A new president in the White House heightens worry for some in the sector. "There's a concern you're going to see an increase in the capital gains tax [under an Obama presidency]," said Miroslav Lazarov, vice president at McGladrey Capital Markets. Lazarov adds that while an Obama administration would be more focused on developing renewable energy, any economic upswing would increase oil demand for the short term, which should keep markets robust.

"We're going to be forced to start drilling again," Lazarov said.

Mother Nature may also complicate matters. "All it's going to take is a little bit of a cold spell and oil prices are going to shoot back up," said Parham, who anticipates a return to oil prices around $80 a barrel. "Don't believe the demand decline hype."