Last year, the value of U.S. energy deals reached a record-breaking $192 billion, propelled by major takeovers in the oil and gas sector, which was more than three times the amount recorded in 2022, as reported by analytics firms Enverus on Tuesday.
Acquisitions in the Permian shale basin, spanning West Texas and New Mexico and being the largest U.S. oilfield, witnessed a surge over the past two years. This surge was fueled by rising oil prices due to increased demand following Russia’s invasion of Ukraine, prompting producers to secure wells for future supplies.
The fourth quarter of the year saw deal values skyrocket to $144 billion, a historic high for any quarter and the entire year, driven by three pending deals: Exxon Mobil’s bid for Pioneer Natural Resources, Chevron’s offer for Hess, and Occidental Petroleum’s pursuit of CrownRock.
Enverus’ Senior Vice President, Andrew Dittmar, highlighted that the oil and gas industry is currently experiencing a consolidation wave comparable to the late 1990s and early 2000s, giving rise to modern supermajors.
Dittmar predicted that deal activities would persist in the coming year, citing potential divestitures and the anticipated offer of shale oil and gas producer Endeavor Energy. Reuters had previously reported that the company, based in Midland, Texas, could be valued between $25 billion and $30 billion in a sale.
Additionally, Dittmar suggested that buyers looking to divest portions of significant acquisitions could lead to a flurry of smaller deals, with private-equity firms expressing interest in these non-core assets, having raised new capital.
In terms of specific numbers, oil-producing asset acquisitions dominated 2023, accounting for approximately $186 billion in deals. The largest among these was Exxon’s pending $65 billion offer for Pioneer.
Contrastingly, natural gas-focused deals saw a smaller total of $6 billion last year, down from $10.6 billion in 2022. The largest deal in this category was Tokyo Gas’ $2.7 billion acquisition of Texas-based Rockcliff Energy, according to Enverus.
Despite a 44% drop in U.S. gas futures in 2023, following a 20% increase in 2022, the acquisition aligns with Tokyo Gas’ strategy to expand its North American shale gas operations to meet the growing demand for natural gas as an energy transition fuel.
