Dated: Monday Oct. 14, 2013

When Goldman Sachs talks, the market generally sits up and takes notice.

In taking a Nostradamus-like look at the oil exploration sector it comes to one significant conclusion, makes two upgrades and singles out seven potential takeover targets.

Its substantive point (posed in three parts) is the giant integrated oil and gas firms are spending more than in recent history on exploration (US$25bn last year), yet it is actually cheaper to acquire already-discovered barrels than drilling for them, which puts mergers & acquisition (M&A) activity firmly on the agenda.

“We believe assets that are material, oily, close to sanction and in regions of relatively low political risk screen as potential M&A candidates,” the broker said in a note to clients.

It reckons Afren (LON:AFR), Africa Oil (CVE:AOI), Bankers Petroleum (LON:BNK), Genel (LON:GENL), Gulf Keystone (LON:GKP), Rockhopper (LON:RKH) and Ophir (LON:OPHR) screen well on this basis.