Upstream mergers and acquisitions hit $105 billion in 2024, according to Enverus

Enverus Intelligence® Research (EIR) recently released a report detailing the ups and downs of the upstream M&A market in 2024. According to the report, a total of $105 billion in U.S. upstream deals were closed during the year, marking it as the third-highest total on record as tracked by Enverus. This figure fell behind the record-setting $192 billion in 2023 but slightly edged out the $108 billion seen in 2014. However, the latter half of the year saw a sharp decline in activity, with only $9.6 billion in upstream M&A recorded in the fourth quarter, marking the fourth consecutive quarterly drop in value.

Andrew Dittmar, principal analyst at EIR, pointed out that the decline in deal value and volume in the final quarter of 2024 compared to the peak at the end of 2023 was primarily due to the dwindling number of M&A targets available for buyers. Larger exploration and production companies are also focused on integrating previous deals before seeking out new acquisitions. He also noted that the fluctuation in oil prices may have deterred some buyers, while interest in gas and gas-heavy assets has been rising to meet the growing demands from industries such as LNG and data centers.

Interestingly, the most significant shift observed in the last quarter was the lack of consolidation between publicly traded E&Ps, marking the first time this has occurred in a quarter since 2022. With $188 billion in public company consolidation since 2023, including 11 deals over $2 billion, there are now fewer viable targets for acquisition. Major players like Chevron, ConocoPhillips, Diamondback Energy, and ExxonMobil have been preoccupied with closing and integrating their respective deals, often experiencing delays in the process due to increased scrutiny by the Federal Trade Commission.

Despite the slowdown in corporate M&A activity, Dittmar remains optimistic about the future of the industry, suggesting that further consolidation is on the horizon. He predicts that in a few years, there will be fewer companies operating in the primary U.S. shale plays as the industry continues to evolve and reshape itself in response to changing market dynamics.