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U.S. upstream oil and gas deals hit $105 billion in 2024

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Operators to look beyond the Permian for deals in 2025

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Operators look to refracking in mature shale plays

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Gas-focused M&A increased four times in 2024 compared to

2023

By Georgina McCartney

HOUSTON, Jan 29 (Reuters) - Dealmaking in the U.S.

upstream oil and gas industry hit $105 billion in 2024, the

third highest annual total ever, but activity slowed in the

second half as buyers found fewer targets to acquire,

consultancy Enverus said on Wednesday.

Last year's total deal value fell sharply behind the

whopping $192 billion in mergers and acquisitions done in 2023,

which included the $60 billion combination of Exxon Mobil ( XOM )

and Pioneer Natural Resources.

The Permian remained the most desirable acquisition target,

but buyers are also looking further afield as opportunities

there dry up, according to Enverus' report.

"We are going to be in for some interesting surprises

this year in terms of operators looking at regions and plays we

wouldn't have expected," Enverus principal analyst Andrew

Dittmar said in an interview.

"For buyers considering acquiring one of the remaining

Permian targets, the question will be if the quality and

resource expansion upside is worth the price of admission,"

Dittmar said in the report.

For many smaller E&Ps companies the decision is likely to be

to look outside of the Permian.

Mature shale plays like the Williston Basin in North Dakota

and Eagle Ford in south Texas offer an alternative and are

getting an uplift as buyers revisit developed assets with the

opportunity to refrack, said Dittmar.

Refracking an old well is akin to a

booster shot

and offers a quick increase in output for smaller

investment than drilling a new well.

The value of deals slipped towards the end of the year with

$9.6 billion booked in the last quarter, as buyers found fewer

M&A targets to pursue and as larger E&Ps were working to

integrate their previous deals before returning to the market,

the report said.

A lack of opportunities to grow may eventually push smaller

operators to sell and further consolidate the industry.

"The set of remaining acquisition opportunities is largely

smaller, higher up the cost curve, or both," said Dittmar.

Coterra Energy's ( CTRA ) purchase of Avant Natural

Resources and Franklin Mountain Energy in the Delaware Basin for

a combined $3.95 billion was the largest deal of the fourth

quarter of 2024. FourPoint Energy's purchase of Ovintiv's ( OVV ) Uinta

assets in Utah for $2 billion, meanwhile, marked one of the

largest recent private acquisitions.

The value of gas-focused M&A increased four times in 2024

compared to 2023, rising above $20 billion for the first time

since 2016, per Enverus.

"We will see more of a focus on gas coming up

relatively quickly given the excitement around liquefied natural

gas, data center build-out and power demand," Dittmar told

Reuters.