Mergers and acquisitions in the upstream segment of the U.S. oil and gas industry hit $3.4 billion in the first quarter of the year, Reuters has reported, citing data from Enverus, the energy consultancy.
The value of the deals in the first quarter compares with $600 million for the first quarter of 2020 but is less than the $27.8 billion in deals recorded for the fourth quarter of 2020.
The five biggest deals last quarter involved a private company, Enverus noted in its report. These included Pioneer Natural Resources’ $6.4-billion acquisition of privately owned DoublePoint and Energy Transfer’s takeover of Enable Midstream Partners for $7.2 billion.
Norway’s Equinor also made a deal with a private company last quarter—it sold oil-producing assets in the Bakken play to Grayson Mill Energy, a firm backed by private equity money.
In February alone, mergers and acquisitions in the U.S. oil and gas upstream space totaled 35, up 12.9 percent on January but down 25.53 percent on the 12-month average, figures from GlobalData showed.
According to a senior Enverus analyst, the uptrend will continue. Andrew Dittmar added that private companies are becoming more willing to buy now that oil companies’ stock prices are rising and they are looking to offload non-core assets.
The pandemic that shook the oil and gas industry last year unleashed a wave of consolidation deals as companies grappled with the new reality of demand destruction and a gloomy long-term outlook.
This led to some notable deals in the shale patch, including Chevron’s acquisition of Noble Energy and ConocoPhillips’ takeover of Concho Resources, both completed last year.
According to analysts, these two deals marked the beginning of the M&A wave that is now expected to accelerate, with exploration and production companies with manageable debts and strong acreage positions tying up to benefit from each other’s strengths to emerge stronger from the current crisis with a higher appeal to disgruntled shareholders.