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In the midst of a global shift towards sustainable energy and heightened efforts to combat climate change, the U.S. oil industry is experiencing a surge in mergers and acquisitions (M&A), defying expectations of a slowdown. This trend continues from 2023 with significant deals marking the momentum and an anticipated increase in transaction volumes for 2024. Companies in the sector are leveraging M&A to expand their reach, cut costs, and bolster competitiveness.
Data from Enverus Intelligence Research (EIR) highlights the scale of M&A activity in 2023, with total transaction values reaching record levels. The fourth quarter alone accounted for $144 billion, contributing to an annual cumulative total exceeding $234 billion. Notable deals include Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources and Chevron’s $53 billion merger with Hess Corp.
Contrastingly, M&A activity in other regions worldwide has been decreasing, continuing a trend since 2014. Global Data reported a 20% year-over-year decline in global M&A activity for the second quarter of 2024, totaling $86 billion. Enverus data showed 17 major deals globally within this period, 13 of which were in the U.S.
The robust activity in the U.S. oil and gas sector underscores a clear trend of industry consolidation, suggesting that motivations to scale up remain intense despite new environmental pressures. In the second quarter of 2024, announced deals reached $30.2 billion, and M&A activity has spread beyond the Permian Basin to regions such as Eagle Ford and Uinta Basin. Previously, the Permian was a hotspot for expansion, yet it accounted for just 7% of asset transactions this quarter, down from half in previous quarters.
Since the start of 2024, there have been 12 M&A transactions exceeding $1 billion, indicating that the total could surpass last year’s 19. Key deals include ConocoPhillips’ $22.5 billion acquisition of Marathon Oil and Crescent Energy’s $2.1 billion purchase of SilverBow Resources.
As the third quarter unfolds, the fervor continues with significant deals such as Devon Energy’s $5 billion acquisition of Grayson Mills, and the joint $1.1 billion acquisition of Point Energy Partners by Vital Energy and Northern Oil & Gas Inc.
The ongoing consolidation within the U.S. shale industry suggests that the number of independent operators will decrease, resulting in tighter control over shale oil production. This development positions the U.S. shale sector to potentially wield significant influence on international oil prices, analogous to OPEC’s role, rendering the industry’s impact truly global.
