Forbes (July 30, 2024) – We have been in the habit of somewhat cavalierly discussing things like the federal budget or U.S. debt in terms of trillions of dollars in recent years, numbers so enormous that they defy the human mind’s ability to comprehend them. It’s a practice best avoided whenever possible, but one number jumps off the page of the latest quarterly review of oil and gas upstream mergers and acquisition activity from energy data and analysis firm Enverus Intelligence Research (EIR).
In the report released Tuesday, EIR finds that, over the past 12 months, upstream consolidation deals have totaled to an unprecedented $250 billion, which equates to a quarter of a trillion. So, we haven’t reached $1 trillion, but the very fact this number can be reasonably expressed as a meaningful fraction of that level is somewhat astonishing, and it shows just how intense this latest rush to consolidate and grow larger in America’s shale patch has been.
Led by the $22.5 billion merger between oil giants ConocoPhillips and Marathon Oil, the most current quarter of April through June saw more than $30 billion in new deals transacted. Andrew Dittmar, principal analyst at EIR, notes that upstream M&A activity has reached that level in just three previous quarters since EIR began tracking this information.
“M&A momentum carried into the second quarter as pressure built on companies like ConocoPhillips, Devon Energy and SM Energy, that had previously stayed out of the market to keep pace with peers and grow in scale,” Dittmar says. “In the case of ConocoPhillips and Devon Energy, running out of inventory doesn’t appear to be as high a concern, but there is still a perception that successfully navigating the maturing phase of shale requires building resource base with M&A.”
