Mergers and acquisitions landscape in the US oil and gas sector has kicked off 2024 with an impressive total of $51 billion in transactions. This strong start continues the momentum seen in the previous year, where dealmaking reached a record $192 billion, highlighting a strategic focus on consolidation and high-quality asset acquisitions.
A significant portion of this year’s activity, accounting for 60%, has been concentrated in the Permian Basin, underscoring its ongoing role as a critical hub for oil and gas operations. According to industry experts at Enverus Intelligence Research, this region’s allure is driven by its abundant high-quality inventory, making it a focal point for major deals, including Diamondback Energy’s significant $26 billion purchase of Endeavor Energy Resources. This acquisition places Diamondback at the forefront of Permian producers, echoing the scale of Pioneer Natural Resources prior to its acquisition by ExxonMobil.
Further enhancing its presence in the Permian, APA Corporation has expanded its footprint by acquiring Callon Petroleum for $4.5 billion, reasserting its position as a major player in the shale landscape after diversifying its portfolio across both US and international assets.
Despite these high-profile transactions, the market may face challenges. Enverus notes that the list of potential private company targets is narrowing, which could prompt public companies to explore mergers amongst themselves or seek acquisitions across different regions. The Eagle Ford Shale in South Texas and the SCOOP/STACK plays in Oklahoma are emerging as attractive areas due to their fragmented ownership and the presence of numerous private equity-backed producers.
Regulatory scrutiny, particularly from the US Federal Trade Commission, remains a potential obstacle due to concerns over antitrust implications. This scrutiny is pushing companies to consider broader strategic options to avoid regulatory pushback.
As we look forward, Enverus anticipates continued interest in diversified shale plays and potential international expansions, driven by the strategic need for US LNG feedstock by global players like INEOS, Tokyo Gas, and TotalEnergies.
One Oak Partners remains committed to leveraging our industry expertise and insights to guide our stakeholders through the evolving landscape of oil and gas investments. We believe that the strategic shifts and regulatory dynamics currently shaping the market present both challenges and opportunities for private equity firms and their investment strategies in the energy sector.
