Shares in oil and gas producer Woodside Petroleum Limited (ASX: WPL) are trading around 1% lower on Thursday after the group announced a major acquisition.

The deal will see Woodside acquire all of ConocoPhillips’ interests in Senegal for US$350 million, plus a completion adjustment of approximately US$80 million.

Amongst the key assets being acquired is a production sharing contract in SNE which “is one of the largest global deep water oil discoveries since 2014. Woodside estimates that the SNE discovery contains 560 MMbbl of recoverable oil.”

News of the deal didn’t appear to please shareholders in FAR Ltd (ASX: FAR), which also owns a share of the SNE asset.

FAR’s shares were sold off before entering a trading halt in the wake of Woodside’s announcement with investors apparently re-evaluating FAR’s value based on the Woodside-Conoco deal.

Today’s acquisition comes after the failed attempt by Woodside to merge with Papua New Guinea-based peer Oil Search Limited (ASX: OSH) back in September 2015.

The energy sector appears ripe for merger and acquisition (M&A) activity given the fall in the oil price and where we are in the energy cycle.

Unfortunately, oil and gas producers such as Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG) have been caught with stretched balance sheets (they’ve spent billions of dollars bringing their respective LNG projects online) and there appears little prospect that they will be in a position to maximise the opportunities which the current cyclical lows should bring.

That’s why Woodside and Oil Search could be the best options for investors seeking energy sector exposure, as both companies appear well positioned to capitalise on opportunities as they arise.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.