U.S. oil mergers sharply decelerated in the third quarter of 2024, following a year-long wave of consolidation that left fewer companies available for acquisition in the country’s top shale regions, according to a report by analytics firm Enverus on Wednesday. Mergers and acquisitions (M&A) in the oil sector totaled $12 billion for the quarter ending September 30, marking the lowest figure in six quarters.
“Upstream M&A was bound to drop” after 2023’s record $192 billion in deals, mostly centered in the Permian Basin, said Andrew Dittmar, principal analyst at Enverus Intelligence Research. The Permian Basin, located in West Texas and New Mexico, is the largest U.S. shale oil field and was the focus of major deals over the past year. However, recent buyers are now focusing on portfolio reviews, aiming to sell off non-core assets.
Occidental Petroleum’s $818 million sale to Permian Resources and APA Corp’s divestment of older properties are examples of how some of the biggest buyers are now offloading assets. The two largest deals in Q3 2024 occurred outside the Permian Basin, signaling increased interest in secondary shale fields. Devon Energy’s $5 billion purchase of Grayson Mill Energy’s assets in North Dakota and Quantum Capital Group’s $1.8 billion acquisition of Caerus Oil & Gas properties in Colorado and Utah were the quarter’s top deals.
With a total value of $12 billion, Q3 2024 marked the smallest quarter for oil and gas M&A this year, less than half of the $30 billion in deals recorded in the second quarter. Andrew Dittmar noted that there is still significant potential in developing oil and gas assets outside of the major shale plays, with private and smaller public companies expected to show increased interest in these regions.