Oil and Gas Dealmaking Reaches Record High in 2023, Enverus Reports

Blockbuster Takeovers Propel U.S. Energy Dealmaking to Record $192 Billion

Last year, the value of U.S. energy dealmaking hit a record $192 billion, driven by blockbuster takeovers by oil and gas majors. This amount is more than triple the value in 2022, according to data from analytics firm Enverus released on Tuesday. The surge in acquisitions in the Permian shale basin, spanning West Texas and New Mexico, was a key contributing factor to this remarkable growth, as oil prices surged following Russia’s invasion of Ukraine and producers scrambled to secure producing wells for future supplies.

Pending Deals Drive Fourth Quarter Deal Values to Record $144 Billion

The fourth quarter saw deal values soar to a record $144 billion, driven by three pending deals: Exxon Mobil’s offer for Pioneer Natural Resources, Chevron’s bid for Hess, and Occidental Petroleum’s bid for CrownRock. This surge in deal values marks a record high for any quarter and any year. Enverus’ Senior Vice President, Andrew Dittmar, likened the historic consolidation wave in the oil and gas industry to what occurred in the late 1990s and early 2000s, leading to the emergence of modern supermajors.

Continued Deal Mania Expected in 2023

Andrew Dittmar also mentioned that deal mania is expected to continue in 2023, with potential divestitures and the anticipated offer of closely held shale oil and gas producer Endeavor Energy. The acquisition of oil-producing assets predominated in the U.S. in 2023, with a total of approximately $186 billion in such deals last year, including Exxon’s pending $65 billion offer for Pioneer, the largest of these deals. Additionally, the acquisition of natural gas-focused deals totaled $6 billion, with the largest being Tokyo Gas’ $2.7 billion acquisition of Texas-based Rockcliff Energy.

Japanese Company’s Efforts to Expand North American Shale Gas Operations

Despite a 44% plunge in U.S. gas futures in 2023, Tokyo Gas’ acquisition of Rockcliff Energy is part of the Japanese company’s efforts to expand its North American shale gas operations to meet the growing demand for natural gas as an energy transition fuel. Private-equity firms have also raised new capital and are likely to be interested in acquiring non-core assets generated from the big acquisitions, which could lead to a flurry of smaller deals this year.