After witnessing the biggest first quarter for global upstream dealmaking in five years, the industry is poised for further growth, with an estimated $150 billion of merger and acquisition (M&A) deals anticipated in the remainder of 2024.
Fuelled by consolidation in the US shale patch, global M&A deal value has already surpassed $64 billion this year, representing the strongest first-quarter performance since 2019 and a 145 per cent increase from the first quarter of 2023.
North America led the way in deal value, totalling $54 billion in the first quarter, accounting for about 83 per cent of the worldwide total.
The US shale sector is expected to continue driving activity, with nearly $80 billion of assets still on the market, of which the Permian Basin alone accounts for about $41 billion.
Major players like ExxonMobil, Chevron, Occidental Petroleum (Oxy), and Diamondback Energy are set to invigorate short-term M&A activity by divesting non-core assets.
These divestments, totalling billions of dollars, are expected to pave the way for growth among regional upstream players.
Outside the US, deal activity remained strong, with $10.5 billion changing hands in the first quarter, a 5 per cent year-on-year increase. Notable transactions included oil and gas majors like BP, Chevron, Shell, and TotalEnergies, collectively accounting for $5.2 billion.
Demand for gas-producing resources remained high, representing about 66 per cent of total resources bought and sold.
Africa witnessed significant activity, with transactions exceeding $5.3 billion, driven by oil and gas majors.
The largest deal was Shell’s divestment of its stake in the SPDC joint venture in Nigeria for $2.4 billion.
South American M&A ticked up to $752 million-worth of assets changing hands, following a quiet period in 2023.
In the Middle East, National Oil Companies (NOCs) like ADNOC, Saudi Aramco, and QatarEnergy are bolstering their gas and LNG portfolios to cut emissions and diversify their economies away from oil revenues.
QatarEnergy announced the North Field West (NFW) development to boost LNG capacity, while ADNOC and Aramco are exploring further expansion opportunities in the LNG sector.
The surge in global upstream M&A deals reflects the industry’s continued resilience and strategic repositioning amid evolving market dynamics and the ongoing energy transition.
