Shale M&A Forecasted to Accelerate in 2025

Shale M&A Activity Expected to Surge in 2025

After a recent slowdown in shale deals, industry experts are predicting a resurgence in mergers and acquisitions next year. This uptick is expected to be fueled by the belief that oil and gas mergers will face fewer obstacles in gaining anti-trust approval under the upcoming administration of President-elect Donald Trump.

In the third quarter of this year, only $12 billion in upstream deals were recorded, marking the lowest level since the beginning of 2023. However, analysts anticipate a reversal of this trend as companies look to offload billions of dollars worth of unwanted assets following major mergers. Companies like ExxonMobil and Occidental Petroleum are already taking steps in this direction.

One potential boon for the industry under the new administration might be reduced scrutiny from the Federal Trade Commission, which has recently become more stringent in its oversight of oil deals to prevent anti-competitive practices. This increased regulatory focus has caused delays in deal approvals, but experts believe that the tide may turn under the new administration.

While oil market volatility has historically posed challenges for mergers and acquisitions, experts believe that current market conditions are more conducive to deal-making. Companies are keen to bolster their inventory of drilling locations, particularly as cash flow remains a top priority in the industry.

Lower interest rates, controlled inflation, and anticipated regulatory reforms all point to a promising M&A landscape in the coming year. While oil has dominated deal-making in recent years, the natural gas sector is also expected to see increased activity, benefiting from rising demand. With a more favorable regulatory environment on the horizon, industry experts are optimistic about the pace of mergers and acquisitions in the shale sector in 2025.