The U.S. Oil and Gas Industry Remains in the Grip of Merger Mania

After more than $230 billion worth of mergers and acquisitions in the U.S. oil and gas industry in 2023, the M&A momentum continued in the first half of 2024, too, with tens of billions of dollars worth of new deals announced so far this year.  

Last year, U.S. oil and gas exploration and production companies spent as much as $234 billion on M&As-the highest such spend in real dollar terms since 2012, the Energy Information Administration (EIA) said in an analysis in March.  

The deal-making of the past year marks a return to the consolidation trend from before 2020, the EIA noted. Between 2020 and 2022, heightened market volatility and uncertainties in demand and supply led to a decline in transactions.   

Now deals are being announced almost every week, since ExxonMobil and Chevron announced in October 2023 their respective deals worth over $50 billion each.

Since the end of 2022, the U.S. upstream sector has been announcing more deals in terms of value compared to the international upstream industry, according to data from Enverus M&A Analytics cited by Reuters on Monday.

The record so far in the U.S. upstream dealmaking was in the fourth quarter of 2023, with a total of $144.3 billion of transaction value announced. This included Exxon and Chevron's mega-deals.

This year, the latest merger in the U.S. oil and gas industry was announced at the end of May when ConocoPhillips said it had agreed to buy Marathon Oil in an all-stock deal with an enterprise value of $22.5 billion, inclusive of $5.4 billion of net debt.   

The merger wave is far from over, many market observers say.

The deal value so far this year has already surpassed the total deal value of $69 billion recorded for the entire first half of 2023, Atul Raina, Vice President of Upstream M&A Research at Rystad Energy, wrote in an analysis at the end of May.

"Overall, North America is expected to continue driving this future M&A activity, with opportunities worth nearly $80 billion on the market, including nearly $41 billion worth of non-Permian shale opportunities," Raina said days before the ConocoPhillips-Marathon Oil deal was announced.

By Tsvetana Paraskova for Oilprice.com

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