Mergers and acquisitions in the U.S. oil and gas industry went up by 57% last year, a report by Ernst & Young found.
The increased consolidation activity followed record profits and intensified competition for a limited amount of untapped resources.
Per the report, the value of M&A deals last year reached $49.2 billion, which was up from $31.4 billion for the previous year. The number was driven higher by a couple of so-called megadeals featuring Big Oil majors Exxon and Chevron.
Exxon last year struck a deal to acquire Pioneer Natural Resources for some $60 billion, while Chevron agreed to take over Hess Corp. for some $53 billion, although that deal has stalled due to Exxon’s opposition focusing on Hess interests in Guyana’s Stabroek Block.
According to EY, dealmaking will remain robust this year as well, and in 2025 too, with spending on mergers and acquisitions rising further.
“We started to see in 2023 a focus to consolidate the positions that operators had,” EY strategy and transactions group partner Bruce On told Reuters in an interview.
In addition to consolidation, oil and gas companies in the U.S. also increased spending on new exploration and production: the total for $2023 stood at $93.1 billion, which was up by 28% on 2022.
Earlier this month, Enverus also forecast another strong year for mergers and acquisitions in the U.S. oil and gas space. The company reported $30.2 billion worth of new deals announced during the second quarter of the year alone. The third quarter of the year also got off to a strong start with the $5-billion acquisition of Grayson Mills by Devon Energy—a deal in the Bakken play—and the $1.1-billion acquisition of Point Energy Partners by Vital Energy and Northern Oil & Gas.
Since the start of the year, there have been 12 deals with a size of $1 billion or more, Enverus also reported, suggesting that the total for the year could exceed last year’s 19 deals of a billion dollars or more.
By Irina Slav for Oilprice.com
