Mergers and acquisitions in the US oil and gas industry rose 57% last year, a report by Ernst & Young.
Increased consolidation activity followed record profits and intensified competition for a limited amount of unused resources.
According to the report, the value of M&A deals last year was $49.2 billion, up from $31.4 billion the previous year. The increase was due to some so-called megadeals involving oil majors Exxon and Chevron.
Exxon last year met a deal to acquire Pioneer Natural Resources for around $60 billion, while Chevron agreed to acquire Hess Corp. for about $53 billion. However, that deal stalled because Exxon opposed Hess’s interests in the Stabroek Block in Guyana.
According to EY, deal-making will remain robust this year and into 2025, with mergers and acquisitions spending continuing to rise.
“We have started to see a focus on consolidating operators’ positions in 2023,” said EY strategy and transaction group partner Bruce On told Reuters in an interview.
In addition to consolidation, oil and gas companies in the US also increased their spending on new exploration and production: the total for 2023 was $93.1 billion, an increase of 28% over 2022.
Earlier this month, Enverus also forecast another strong year for mergers and acquisitions in the U.S. oil and gas sector. The company reported $30.2 billion in new deals in the second quarter of the year alone. The third quarter of the year also started strong with Devon Energy’s $5 billion acquisition of Grayson Mills – a deal in the Bakken area – and Vital Energy and Northern Oil & Gas’s $1.1 billion acquisition of Point Energy Partners.
Since the beginning of the year, there have been twelve deals with a volume of one billion dollars or more, Enverus reported. This means that the annual total could exceed that of the previous year, when there were 19 deals with a volume of one billion dollars or more.
By Irina Slav for Oilprice.com
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