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 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 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 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.
(Reporting by Georgina McCartney in Houston, editing by Liz Hampton and David Gregorio)
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