NEW YORK (Reuters) – U.S. oil and gas producers’ appetite for dealmaking is nearing last year’s record, with rising interest in smaller oil fields offsetting slower activity in the key oil-producing Permian Basin, analysts at consultancy Rystad said on Wednesday .
According to Rystad analysis through the end of August, U.S. manufacturers have spent nearly $100 billion on mergers and acquisitions to date, with another $46 billion in assets currently up for sale.
According to Rystad figures, a record $155 billion in production and exploration-focused agreements were signed in 2023.
Industry consolidation reached a fever pitch last year as top oil producers unveiled megadeals to boost both their production and their backlog of drilling sites. For private owners, this has provided a rare opportunity to profitably exit investments.
“Private equity-backed oil producers are likely to continue selling assets to capitalize on listed companies’ appetite for equity and secure premium valuations as competition among potential buyers increases,” said Atul Raina, vice president of upstream M&A analysis at Rystad .
While the deal-making rush last year focused almost exclusively on the Permian Basin in Texas and New Mexico, intense competition for acreage in the largest U.S. oil field has prompted opportunistic buyers to look elsewhere.
SM Energy (NYSE:), which is expanding its footprint in Utah’s Uinta Basin by acquiring XCL Resources for $2 billion, said good deals are harder to find in the Permian.
“We would love to add those types of assets to the Permian, but it’s very difficult right now to get something of that size anywhere near that price,” SM Energy Chief Financial Officer Wade Pursell said at a conference on Tuesday .
Deals focused on the Permian this year amounted to just 46% of the first half total, compared to 92% in the second half last year, according to Rystad’s analysis.
Deals in North Dakota’s Bakken Basin rose to 12% in the first half of this year, compared to virtually none in the second half of last year. The Marcellus Basin in Pennsylvania accounted for 14% of deals in the first half of this year, while the Eagle Ford Basin (NYSE:) in Southeast Texas accounted for 13%, according to Rystad data.
(This story has been refiled to add the analyst’s full name and title in paragraph 5)
