The volume of transactions in the US oil and gas upstream sector surged to $38 billion in the first quarter of this year, reaching its highest quarterly level in two years, analytics firm Enverus said on Wednesday.
The shale producer Devon DVN.N and its smaller rival Coterra finalized their merger agreement last week, after announcing their intention to unite in February. This $25 billion operation represented the lion’s share of first-quarter transactions.
Both companies operate across various shale plays, with presence in the Delaware portion of the Permian Basin in Texas and New Mexico, as well as the Anadarko Basin in Oklahoma.
Transactions significantly slowed down in March, as crude oil prices soared following the American-Israeli strikes against Iran in February, triggering a broader conflict in the Middle East and disrupting maritime traffic in the Strait of Hormuz.
Since the war began on February 28, Brent crude futures have fluctuated between a low of $77.74 per barrel and a high of $118.35.
However, the rise in oil prices is expected to pave the way for a resurgence in transactions by enabling more private exploration and production companies to come to market, while also encouraging continued consolidation, Enverus stated.
“The market is entering a temporary holding pattern as volatile conditions clouded oil price outlooks, but arguments for sustained higher oil prices are strengthening and setting the stage for a rebound in mergers and acquisitions,” noted Andrew Dittmar, senior analyst at Enverus Intelligence Research.
“We are likely heading towards a new wave of consolidation, as rising oil prices stimulate both private company market entry and the appetite of publicly-traded exploration and production companies for transactions, whether it be corporate consolidation or private asset sales,” he added.
Other notable transactions include Mitsubishi’s acquisition of Aethon Energy for $7.6 billion, marking the largest deal ever made by the Japanese company as it seeks to bolster its gas supply chain.
