By Mark Jaffe, EUCI energy writer
First quarter 2026 U.S. upstream oil and gas sector mergers and acquisitions (M&A) hit a quarterly two-year high – $36 billion – before activity cooled in the face of market and geopolitical uncertainties, according to Enverus Intelligence Research.
“The slowdown in volume reflects less active deal flow in March given uncertainty in oil markets once the Iran conflict commenced,” the industry analyst’s merger report said.
Nevertheless, higher oil prices are expected to accelerate a rebound in dealmaking, with continued corporate consolidation and more private exploration and production companies pursuing sales.
“The market entered a temporary holding pattern as volatility clouded the outlook for oil prices, but the case for higher-for-longer oil prices is strengthening and creating the setup for an M&A rebound,” Andrew Dittmar, principal Enverus analyst, said in a statement.
“We expect that to translate into more private companies coming to market, something we are already starting to see, and continued consolidation among public operators,” Dittmar said.
A single corporate consolidation – the $25 billion merger of Devon Energy and Coterra Energy – accounted for the lion’s share of the deal value for the quarter.
The second biggest deal was Mitsubishi’s purchase of Aethon Energy – with resources and pipelines in the Haynesville Shale along the Louisiana-Texas border – for $7.6 billion, a reflection on continued interest of international buyers, particularly in gas-weighted regions.
“Limited remaining Haynesville targets are likely to push buyers to evaluate alternative regions such as Appalachia despite infrastructure constraints, or even gassier portions of the Permian once a pipeline buildout helps alleviate extremely poor gas pricing in the region,” Enverus said.
Asset-backed securitization (ABS) financing – secured mainly by the contractual cashflows of specific assets, with ownership rights serving as secondary collateral – is playing a growing role in production-weighted acquisitions.
Flywheel Energy’s $3 billion purchase of Ovintiv’s Anadarko Basin assets used ABS financing.
The Devon, Mitsubishi, and Flywheel Energy acquisitions accounted for 87% of the quarter’s deal value.
While M&A value was more than $60 billion for the last six months, there was an overall decline in the first quarter of 2026 with only eight deals over $100 million, tying a post-2020 low.
The largest of those was Caturus Energy’s purchase of SM Energy’s Eagle Ford assets for $950 million.
Nevertheless, the prospect of continued higher oil prices is shifting seller behavior and increasing the likelihood of private sales.
“Better pricing is expected to encourage more private E&Ps [exploration and production companies] to bring assets to market, including a handful of remaining targets in the Permian, while also making mature plays like the Eagle Ford and Williston significantly more economic to develop,” Enverus said.
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