By Mark Jaffe, EUCI energy writer
U.S. oil and gas upstream mergers and acquisitions reached $105 billion in 2024 – the third highest total in more than a decade – even as deals cratered in the second half of the year, according to Enverus Intelligence Research.
In the fourth quarter of 2024, activity was $9.6 billion, marking the fourth consecutive decline in quarterly value. The record for mergers and acquisitions was $192 billion in 2023 followed by $108 billion in 2014.
“Deal value and volume continued to drop in the final quarter of 2024 from its peak at the end of 2023 as buyers grappled with fewer M&A targets to pursue,” Andrew Dittmar, an Enverus principal analyst, said in a statement.
“Increased volatility in oil prices may have also deterred some buyers, while there is rising enthusiasm for gas and gas-weighted assets to feed burgeoning demand from LNG [liquified natural gas] and data centers,” Dittmar said.
In addition, a few of the larger exploration and production companies that have been very active acquiring assets are working to integrate their previous deals before returning to market.
Gas-focused activity led the way in 2024 increasing fourfold over 2023 to more than $20 billion for the first time since 2016.
Interest was focused on the Haynesville Shale, which straddles Louisiana, Texas, and Arkansas, and is the best position play to supply Gulf Coast LNG export terminals. Still, there was activity in Appalachia and other areas.
Among the buyers were Asian importers of LNG, who returned to the U.S. market after being discouraged by poor returns a decade ago, Enverus said.
Major oil and gas companies, which had focused on adding oil inventory, may now turn their attention to gas deals, and there may even be smaller oil-focused independent exploration and production companies that decide the best option to extend inventory is to pivot to gas.
Fourth-quarter oil deals were centered on private company acquisitions as corporate acquisitions declined.
The largest deal of the fourth quarter was Houston-based Coterra Energy’s combined $3.95 billion purchase of Avant Natural Resources and Franklin Mountain Energy. The two deals led to the Permian Basin accounting for more than 40% of total quarterly deal value.
“The Permian remains at the top of the list for where buyers would prefer to add assets, but it’s also the most challenging market to buy into from the perspective of available targets and sellers’ expectations on pricing,” said Dittmar.
While Avant and Franklin Mountain were two of the last remaining private opportunities in the Permian’s Delaware Basin, the Midland Basin still holds a few notable remaining private equity portfolio companies, Enverus said.
Another strategy is to acquire assets to extend mature plays that can be refraced and redeveloped. In South Texas’ Eagle Ford, Houston-based Crescent Energy has been the main consolidator, acquiring Ridgemar Energy in the fourth quarter of 2024 for $905 million.
Nevertheless, diminishing opportunities may push smaller operators to sell, adding to further consolidation in the sector, Enverus said, noting that there were 11 mergers between public companies that exceeded $1 billion in 2023 and 2024 combined.
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