Global upstream mergers and acquisitions (M&A) activity is on course to exceed last year’s $175 billion total, Rystad Energy announced in a market update sent to Rigzone recently.
A chart included in the update outlined that global upstream M&A activity amounted to $65 billion in the first half of 2025 and $110 billion in the second half of last year. According to this chart, global upstream M&A activity came in at $101 billion in the first half of 2026 and there are $137 billion worth of assets on the market in the second half of the year.
The chart, which displayed data from the first half of 2019 to the second half of 2026, showed that global upstream M&A activity was highest in the second half of 2023, at $193 billion, and lowest in the first half of 2020, at $13 billion.
“Global upstream mergers and acquisitions activity is on course to exceed last year’s $175 billion total, supported by nearly $130 billion in transactions announced as of August 2026 and a further $137 billion worth of opportunities currently on the market,” Rystad noted in its update.
“Only around one-third of this pipeline would need to transact for annual deal value to surpass 2025 levels. However, oil-price volatility is widening valuation expectations and making deal execution increasingly difficult,” Rystad added.
In the update, Atul Raina, VP of Oil and Gas M&A at Rystad, highlighted that “oil price volatility has created a deeper opportunity set, but it has also made deals harder to execute”.
“Sellers are looking at elevated spot prices and near-term cash flow, while buyers are underwriting against a backwardated price strip and the possibility that current conditions may not last,” Raina added.
“The opportunity is clearly there, but pipeline value does not automatically translate into executable deal value. Timing, transaction structure, and the willingness to bridge valuation expectations will determine whether the remainder of 2026 produces a breakout or a growing backlog,” Raina continued.
1H 2026
Global upstream M&A deal value increased 55 percent year on year to approximately $100 billion during the first half of 2026, despite deal count falling 12 percent to 217, Rystad’s update pointed out.
North America accounted for more than $68 billion, or 68 percent, of first-half global deal value, according to the update, which highlighted that shale transactions represented more than $63 billion, which the update noted was equivalent to 92 percent of North American activity and 63 percent of global upstream M&A.
Two North American combinations – Devon Energy’s $25.1 billion merger with Coterra Energy and Shell’s $16.4 billion acquisition of ARC Resources – accounted for 41 percent of global deal value, “demonstrating how fewer but larger transactions supported activity”, the update outlined.
According to Rystad’s update, the conflict in the Middle East has acted as both a headwind and a tailwind for upstream M&A.
“Approximately $56 billion, or 56 percent, of first-half deal value was announced before the conflict began on 28 February,” the update noted.
“A further $44 billion was announced from March through June, equivalent to around $11 billion per month despite Brent averaging approximately $99 per barrel between March and July,” it added.
“This is the lowest average monthly deal value since 2016 ($10.7 billion monthly average) and 2020 ($8.6 billion monthly average) when Brent prices averaged around $44 per barrel around $42 per barrel, respectively,” it continued.
“At the same time, elevated but volatile prices have encouraged several E&Ps, particularly privately owned E&Ps in the U.S. shale, to test the market, increasing the global opportunity pipeline from approximately $98 billion before the conflict to $137 billion currently,” it went on to state.
“This volatility in prices and uncertainty around a potential resolution to the conflict also brings risks around deal execution,” Rystad stated.
Rystad also revealed in its market update that it expects buyers and sellers “to respond with greater use of contingent or deferred considerations, flexible effective dates, and stronger termination protections as buyers and sellers seek to share commodity-price and closing risk”.
International Dealmaking
Rystad highlighted in its update that international dealmaking has become “more selective”.
“Outside North America, first-half deal value increased seven percent year on year to more than $32 billion,” the company outlined.
“South America led international activity with approximately $13 billion, supported by consolidation in Argentina’s Vaca Muerta. Africa also recorded stronger activity as majors returned as buyers of offshore exploration positions in Angola and Namibia,” it added.
International activity is expected to remain more selective despite nearly $52 billion of opportunities on the market, Rystad stated in its update.
“Major-led divestments and farm-downs will likely dominate as companies recycle capital, share development expenditure and reduce portfolio concentration while retaining exposure to strategically important assets,” it said.
Rystad went on to note in the update that the global M&A market has “sufficient opportunity depth to produce another strong year”.
It warned, however, that the deciding factor will be “whether buyers and sellers can structure transactions that accommodate a volatile oil-price outlook and increasingly complex geopolitical risks”.
2027 M&A
In a statement sent to Rigzone last week, Wood Mackenzie outlined that, according to its Corporate Strategic Planner for oil and gas in 2027, most large oil and gas companies will enter 2027 with gearing below 20 percent, following accelerated deleveraging driven by surging prices and margins in 2026.
“That financial position creates the platform for a five percent rise in investment, a fresh wave of M&A, and the resource renewal aimed at sustaining production into the 2030s,” Wood Mackenzie projected in its statement.
“Strong balance sheets provide strategic optionality just as the need to sustain oil and gas production through the next decade grows more pressing,” it added.
“Excluding Middle Eastern NOCs, production across Wood Mackenzie’s five peer groups declines by 31 percent, or 18 million barrels of oil equivalent per day, between 2030 and 2040,” it continued.
“That decline is the structural driver behind the 2027 push for M&A and upstream business development,” it went on to state.
Wood Mackenzie noted in its statement that M&A activity levels will depend on whether volatility falls enough for buyers and sellers to align on price.
“Rising equity valuations give some companies a financing advantage in equity-led deals,” Wood Mackenzie highlighted.
source: rigzone.com