By Mark Jaffe, EUCI energy writer
Oil and gas field mergers and acquisitions in 2024 reached $207 billion – a 331% year-over-year increase – as consolidation continued among the largest U.S. companies in the sector, according to Ernst & Young LLP.
At the same time, some operators trimmed share buybacks and dividends to shareholders, and exploration and development spending decreased in the face of softer commodity prices.
“Paired with the significant rise in capital expenditures on mergers and acquisition in 2024, these trends reflect a broader shift in the capital allocation strategy for oil and gas companies,” Ernst & Young said.
Revenues for the 40 largest publicly traded oil and gas companies, which the accounting and consulting firm evaluated, were down 3% in 2024 to $235.5 billion compared to 2023, but still up 12% from 2021.
Ernst & Young divided the companies in its study into integrated companies, large independents, and independents.
The large independents and integrated companies were responsible for the majority of the increase in merger and acquisition activity raising their spending to $181.5 billion from $33.4 billion in 2023.
Ernest & Young said it expects the integrated companies and independents to continue to lead activity in 2025 with the acquisition of Hess Corporation by Chevron Corporation and the purchase of certain subsidiaries of Double Eagle IV MidCo by Diamondback Energy Inc.
Other key merger and acquisition activity in 2025 included EOG Resources Inc. acquiring Encino Acquisition Partners, and Maverick Natural Resources by Diversified Energy Company PLC.
“This is a defining moment for the U.S. upstream sector,” Pat Jelinek, leader of EY Americas Oil & Gas, said in a statement. “Fewer, stronger players are emerging, and they are better capitalized, more efficient and laser-focused on resilient growth. The new top 40 companies aren’t just survivors; they’re poised to shape the future of American energy.”
Companies increased their share of unproven properties, which accounted for 42% of the total value of acquisitions, the biggest share of unproven property acquisitions in the last five years.
Lower commodity prices toward the beginning of 2024 also provided attractive valuations for unproved property compared to recent years, Ernst & Young said,
ExxonMobil was the leading purchaser in 2024 with total property acquisition costs of $84.5 billion, mainly from its purchase of Pioneer Natural Resources.
Diamondback Energy was second with $36.8 billion in total acquisitions primarily for its purchase of Endeavor Energy Resources L.P. ConocoPhillips was third with total property acquisition costs of $23.4 billion, with its key purchase the Marathon Oil Corporation.
Total capital expenditures in 2024 were up 108% to $292.1 billion, also the highest total in the last five years and more than double the $139.5 billion of capital expenditures in 2021. The increase was mainly powered by big deals in the Permian, Eagle Ford, and Bakken shale regions.
As commodity prices have fallen from their 2022 highs, large independents and independents have cut their dividend payments.
Large independents reduced dividends and share repurchases 28%, $9.5 billion, year-over-year. Independents cut dividends by 3%, $131 million, during the same time. Dividends and repurchases totaled $29.2 billion.
Still, dividend payments and share repurchases were higher in 2024 compared to 2020–2021, “highlighting the continued pressure from shareholders to provide higher returns,” Ernest & Young said.
Exploration and development expenditures also decreased 7% year-over-year, to $85.5 billion, as sector consolidation and moderating commodity prices lowered capital budget allocations for these activities in 2024.
Spending was down even more sharply for large independents as exploration and development expenditures dropped 13% in 2024 compared to 2023.
“With ongoing uncertainty around supply and demand, pricing, tariffs, and geopolitics, operational efficiency and capital discipline will be critical,” Herb Listen, lead author of the study and Ernst & Young partner, said in a statement. “The companies that adapt quickly, invest strategically and integrate effectively will define the next chapter of U.S. energy.”
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