Blockbuster takeovers by U.S. oil and gas majors Exxon and Chevron this month may spark further consolidation in the energy industry after a quieter third quarter for mergers and acquisitions in the sector, analytics firm Enverus said.
There were 25 U.S. oil exploration and production deals worth $14 billion in the last quarter, Enverus said on Tuesday. This was lower than $16 billion in the same period last year and $24 billion reported in the second quarter of 2023.
However, the historic Exxon XOM.N and Chevron CVX.N deals, worth hundreds of billions of dollars combined, are likely to ignite further consolidation among smaller energy companies seeking to secure remaining drilling opportunities, the report highlighted.
“As anticipated, the pace of consolidation slowed for private E&Ps as the cream of the crop in terms of scale and quality has largely, but not entirely, been bought out,” said Andrew Dittmar, an Enverus director.
“The next logical step in consolidation is more tie-ups between public producers.”
Chevron on Monday agreed to buy Hess HES.N for $53 billion in stock to gain a bigger U.S. oil footprint, less than two weeks after Exxon secured a deal to buy rival Pioneer Natural Resources PXD.N in an all-stock transaction valued at $59.5 billion that would make it the biggest producer in the largest U.S. oilfield.
Prior to its expansion in the Permian Basin with the acquisition of Pioneer, Exxon in July agreed to buy Denbury Inc DEN.N for $4.9 billion.
Other deals in the third quarter included Permian Resources’ PR.N $4.5 billion acquisition of Earthstone Energy ESTE.N, and Energy Transfer’s ET.N $7.1 billion acquisition of pipeline rival Crestwood Equity Partners CEQP.N.
Chevron’s focus on international assets in the acquisition of Hess leaves the door open for more shale deals down the road, albeit at a smaller scale, Enverus said.
The firm also said large independents are likely to go on a “shopping spree” targeting smaller and midsize producers, highlighting potential mergers between Devon Energy DVN.N and Marathon Oil MRO.N and gas producers Chesapeake Energy Corp CHK.O and Southwestern Energy SWN.N.
(Reporting by Swati Verma and Rahul Paswan in Bengaluru; Editing by Sharon Singleton)
