BUZZ-Unloved smaller E&P cos could come into M&A crosshairs

** Smaller oil cos battling with dire exploration performance on top of collapsing oil price may prove M&A targets for majors

** Tullow Oil (LSE: TLW.L - news) down 46 pct, Cairn Energy (LSE: CNE.L - news) 33 pct lower & Premier Oil 22 pct weaker this year

** Contrasts with 0.7 pct drop on STOXX Europe 600 oil & gas index ; majors supported by flight to safety & greater liquidity

** Bernstein says as Big Oil shies away from diminishing returns of ploughing money into exploration, cos should be in a better position to pursue bolt-on acquisitions.

** Notes that little M&A may have been seen in 2008/2009 oil price correction, but majors' balance sheets much stronger now & Bernstein says cos optimisic that oil prices recover.

** Capital (Other OTC: CGHC - news) discipline still key so broker sees large scale bolt-ons as unlikely but E&P cos like Tullow which produce about 100 kbpd could come into their crosshairs

** Premier Oil (LSE: PMO.L - news) & Cairn Energy also fall into lower producer category

** Tullow top FTSE 100 on the day, up 3.7 pct (RM (LSE: RM.L - news) : tricia.wright1.thomsonreuters.com@reuters.net)