U.S. Oil & Gas Industry Is Accelerating Its “Land Grab,” M&A Deals Set Record
The oil and gas industry is undergoing its biggest-ever consolidation, according to Enverus Intelligence Research (EIR), a subsidiary of Enverus. Q4 recorded a massive $144 billion in upstream M&A, the largest quarter EIR has tracked. That pushed full-year 2023 value to more than $190 billion, also setting a record.
The two mega deals by Exxon and Chevron, each worth more than $60 billion, led to a surge in M&A value in the final quarter of 2023.
Record-setting Upstream M&A in Q4 2023
- Q4 recorded a massive $144 billion in upstream M&A, the largest quarter EIR has tracked, pushing full-year 2023 value to more than $190 billion, also setting a record.
- Driving the surge in value were two historic deals, ExxonMobil’s $65 billion acquisition of Pioneer Natural Resources and Chevron’s $60 billion purchase of Hess.
Focus on Permian M&A Activity in 2023
- The Permian dominated M&A activity in 2023 with $103 billion transacted, making it a critical play for buyers to boost their footprint.
- The Permian increasingly consolidated in 2023, leading buyers to potentially look outside the United States for acquisition opportunities.
Potential Uptick in 2024 Deals
- 2024 may see a higher flow of smaller, asset-sized transactions across a wider distribution of plays, with plays like SCOOP | STACK, Eagle Ford, and North Dakota’s Bakken likely to see an uptick in deals.
- Private capital, despite being raised and deployed at a slower pace, would likely be interested in these non-core assets at the right price.
Rise of Gas M&A
- In 2023, upstream M&A was overwhelmingly focused on oil, with $186 billion in deals targeting crude compared to just $6 billion in gas-centric acquisitions.
- Gas M&A total for the year 2024 has already been topped, with increasing interest in gas assets as the US LNG ramp nears.
Outlook for Gas Prices
- Despite the long-awaited US LNG ramp, gas prices are likely to remain low through most of 2024 due to filling gas storage and strong production.
- However, the U.S. is slated to add 10 Bcf/d of LNG export capacity over the next 36 months, offering potential relief for producers from low natural gas prices.
Challenges in International Acquisition Opportunities
- Chevron’s move to acquire Hess for its exposure to Guyana signals a potential trend of US companies looking outside the United States for acquisition opportunities.
- However, attractive international acquisition opportunities are challenging in an increasingly deglobalized world.
Financing
M&A
Natural Gas