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Shale producers follow up mergers, acquisitions amid industry consolidation
(MENAFN) Despite the period of intensive activity and significant deals by major oil and gas companies like Exxon Mobil Corp. and Chevron Corp., some shale producers are actively seeking new mergers and acquisitions. This ongoing M&A activity in the sector is anticipated to remain robust, driven by sustained demand and oil prices stabilizing around USD80 per barrel. The largest U.S. oil producers have been on a buying spree over the past year, acquiring smaller companies to boost their production and asset portfolios in response to investor demands for reduced exploration and cost-cutting measures. These acquisitions have enabled them to enhance their inventory and production capabilities, a strategic move in an industry that remains profitable despite waning public favor.
In the year ending June 30, oil and gas companies globally completed deals worth USD265 billion, with notable transactions including Exxon’s USD60 billion acquisition of Pioneer Natural Resources and Chevron’s USD53 billion purchase of Hess, which encountered arbitration issues. This surge in M&A activity contrasts sharply with the quarterly average of USD30 billion in deals prior to this wave, marking a significant increase from the 2018 average. Smaller shale producers like Devon Energy Inc. and Permian Resources Inc. are also making strategic moves, albeit with less media attention compared to their larger counterparts. Devon's USD5 billion acquisition of Grayson Mill Energy, and Permian Resources' USD800 million purchase of Delaware Basin assets from Occidental Petroleum, reflect a trend of consolidation and expansion within the shale sector.
As major players navigate a period of consolidation and recalibrate their strategies, the ability to acquire smaller companies presents an attractive alternative to organic reserve growth. According to Conrad Gibbons of Jefferies Financial Group, acquiring smaller firms at higher costs is becoming increasingly viable as companies seek to adapt to the evolving market landscape and sustain their growth.
In the year ending June 30, oil and gas companies globally completed deals worth USD265 billion, with notable transactions including Exxon’s USD60 billion acquisition of Pioneer Natural Resources and Chevron’s USD53 billion purchase of Hess, which encountered arbitration issues. This surge in M&A activity contrasts sharply with the quarterly average of USD30 billion in deals prior to this wave, marking a significant increase from the 2018 average. Smaller shale producers like Devon Energy Inc. and Permian Resources Inc. are also making strategic moves, albeit with less media attention compared to their larger counterparts. Devon's USD5 billion acquisition of Grayson Mill Energy, and Permian Resources' USD800 million purchase of Delaware Basin assets from Occidental Petroleum, reflect a trend of consolidation and expansion within the shale sector.
As major players navigate a period of consolidation and recalibrate their strategies, the ability to acquire smaller companies presents an attractive alternative to organic reserve growth. According to Conrad Gibbons of Jefferies Financial Group, acquiring smaller firms at higher costs is becoming increasingly viable as companies seek to adapt to the evolving market landscape and sustain their growth.
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