Record U.S. Oil and Gas Mergers Reach $51 Billion in First Quarter

Permian Basin Drives Surge in M&A Activity Amidst Strong Oil Prices

Apr 23, 2024 - 10:08
Apr 23, 2024 - 10:08
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Record U.S. Oil and Gas Mergers Reach $51 Billion in First Quarter
Record U.S. Oil and Gas Mergers Reach $51 Billion in First Quarter

In the first quarter, mergers and acquisitions (M&A) in the U.S. oil and gas industry hit an all-time high of $51 billion, marking a continuation of last year's trend. This information comes from data provider Enverus.

Energy companies are eager to expand their drilling operations, especially in the Permian Basin of West Texas and New Mexico. This area is attractive because it costs around $64 per barrel to break even. Last quarter, oil prices averaged about $77 per barrel, and this week they're hovering near $83.

Enverus Intelligence Research's principal analyst, Andrew Dittmar, explained that the Permian Basin is a hotspot for M&A activity because it has a lot of good places to drill for oil.

The biggest deal last quarter was Diamondback Energy's offer of $26 billion to buy Endeavor Energy Partners, two major players in the Permian region. Other significant deals included Apache Corp's $4.5 billion purchase of Callon Petroleum and Chesapeake Energy's $7.4 billion acquisition of Southwestern Energy.

However, some big deals, like ones involving Exxon Mobil and Chevron, are being delayed because regulators are checking if they will make things unfair for competition. These deals want to put together a lot of land in the Permian and Haynesville shale fields.

Despite the flurry of activity, Dittmar thinks that the fast pace might not last. With oil prices staying high, many companies prefer to keep their drilling areas instead of selling them, which is a change in how they usually do business.

"Investment options are getting smaller for exploration and production companies," Dittmar said, showing how things are changing in the industry.

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