The U.S. Oil and Gas Industry Spent $234 Billion on M&A in 2023

U.S. oil and gas exploration and production companies spent as much as $234 billion on mergers and acquisitions (M&A) last year—the highest such spend in real dollar terms since 2012, the Energy Information Administration (EIA) said in an analysis on Tuesday. The deal-making of the past year marks a return to the consolidation trend from before 2020, the EIA noted. Between 2020 and 2022, heightened market volatility and uncertainties in demand and supply led to a decline in transactions.   But M&A activity was back with a bang in 2023, when many multi-billion deals were announced, including $50-billion-plus all-stock transactions for each of Exxon and Chevron.

The U.S. upstream oil and gas industry booked its biggest-ever quarter for mergers and acquisitions in the fourth quarter of 2023, with a total of $144 billion worth of deals, Enverus Intelligence Research (EIR) said in a report in January.  Analysts and industry executives expect the consolidation drive that began in 2023 to continue this year, with the potential of more mega-deals of the scale that Exxon-Pioneer and Chevron-Hess announced at the end of last year.  Industry executives of companies active in the Permian basin expect more large-size deals to be announced in the coming months, according to the latest Dallas Fed Energy Survey.  Of the 122 executives responding to a question in the survey, 77% said they expect more acquisitions of $50 billion or more to occur in the next two years.  

One result of recent consolidation activity is larger companies that own more producing assets, the EIA said. If both Exxon and Chevron deals conclude successfully, ExxonMobil could become the largest crude oil and natural gas liquids (NGL) producer in the United States with 1.3 million barrels per day (bpd), or nearly 7% of total U.S. production, ahead of the current leader in output, Chevron, per data from Evaluate Energy cited by the EIA. “Barring any other large production or asset ownership changes, recent M&A could make ExxonMobil the largest crude oil and NGL producer in the United States,” the administration said.