Merger and acquisition activity in America’s upstream oil and gas industry reached $38 billion during the first quarter of this year, representing the strongest quarterly performance in two years, according to analytics firm Enverus announced Wednesday.
The surge was driven largely by the completion of a major merger between shale producer Devon and smaller competitor Coterra, which finalized their combination last week after revealing their consolidation plans in February. The transaction carried a $25 billion price tag and represented the majority of first-quarter deal activity.
The two energy companies have operations spanning several shale formations, including assets in the Delaware section of the Permian Basin across Texas and New Mexico, as well as Oklahoma’s Anadarko Basin.
Transaction activity experienced a significant decline in March as oil price fluctuations intensified following strikes by U.S. and Israeli forces against Iran in February, which sparked wider Middle East tensions and disrupted maritime traffic through the Strait of Hormuz.
From the conflict’s beginning on February 28, international Brent crude benchmark prices have fluctuated dramatically between a floor of $77.74 per barrel and a peak of $118.35.
Despite the March slowdown, elevated oil prices are expected to fuel renewed dealmaking by allowing more private exploration and production firms to pursue sales opportunities while supporting ongoing industry consolidation, Enverus reported.
“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,” stated Andrew Dittmar, principal analyst at Enverus Intelligence Research.
“We are likely heading into another tsunami of consolidation as higher oil prices supercharge both private companies going to market and public E&P appetite for deals, both corporate consolidation and private asset sales,” he continued.
Additional significant transactions included Mitsubishi’s acquisition of Aethon Energy for $7.6 billion, representing the Japanese company’s largest transaction to date as it works to enhance its natural gas supply operations.
