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