After a strong first quarter marked by significant mergers and acquisitions (M&A) activity in the global upstream sector, Rystad Energy Research projects another surge, potentially surpassing US$150 billion (RM714.6 billion) in deals for the remainder of 2024.
According to a statement released on Monday by the Oslo-based energy consulting firm, the industry witnessed an impressive start to the year, with M&A deal value exceeding US$64 billion, representing the strongest first-quarter performance since 2019. This surge reflects a substantial 145% increase compared to the first quarter of 2023, primarily driven by consolidation in the US shale sector.
Rystad Energy highlighted that North America led the charge, accounting for approximately US$54 billion of the total deal value in the first quarter, constituting about 83% of global M&A activity. With nearly US$80 billion worth of assets still on the market, the region is expected to remain a pivotal force in driving dealmaking throughout 2024.
The US shale industry is anticipated to spearhead this surge, with assets valued at over US$52 billion slated for acquisition, representing 66% of the total assets available for purchase.
While the Permian Basin has historically dominated dealmaking, Rystad Energy predicts a shift towards other shale plays, with approximately US$41 billion in non-Permian opportunities currently available. This includes potential sales of assets from companies like Grayson Mill Energy, XcL Resources, ExxonMobil, EQT, Shell, and BP, among others.
Notable players such as ExxonMobil, Chevron, Occidental Petroleum (Oxy), and Diamondback Energy are expected to drive short-term M&A activity through portfolio adjustments, divesting non-core assets acquired in recent transactions. For instance, Chevron plans to divest assets worth between US$10 billion and US$15 billion by 2028, while Oxy aims to divest between US$4.5 billion and US$6 billion.
Atul Raina, Vice President of Upstream Research at Rystad Energy, noted that while the Permian Basin has been a focal point for M&A activity, the diminishing availability of assets in the region is prompting players to explore opportunities outside the basin.
“With appetite still strong, deal-hungry players are looking outside the basin for acquisitions,” Raina said, suggesting a potential power shift in the future North American deals pipeline towards non-Permian assets.
