US oil M&A declines from highs of 2023 as buyers focus on volume over value
Dealmaking has slowed in the U.S. Oil Patch in 2025. The activity is expected to remain muted throughout the remainder of the year as some prolific buyers concentrate on extracting value from their previous acquisitions while others reduce their appetite for takeovers because of weak oil prices and uncertainty in trade.
In the last three month, oil companies spent $17 billion in acquisitions. This is a sharp drop from the peak of dealmaking during the third quarter 2023 when they spent $144 billion in M&A.
Benchmark U.S. Crude recently fell to $55 a barrel from $78 a barrel in January, just prior to the inauguration of President Donald Trump. This was due to increased OPEC+ production and renewed trade tensions.
Diamondback Energy's CFO Kaes van't Hof stated on a recent earnings conference that "we're in a time where there is so much noise and volatility, not much gets done."
"Anything we would consider would have to be very cheap and I don't believe we're at that point yet."
Investor caution is also a result of concerns about Trump's trading policies.
Trade tensions may dampen demand and growth despite his efforts to increase drilling in the United States.
Andrew Dittmar is the principal analyst for Enverus. He said that "Deal activity will likely remain muted throughout the remainder of 1H25, but could pick up in the second half of the year if there are trade deals announced which reduce the chances of a U.S. economic recession."
Dittmar said that the challenge was finding the right match, as investors are not interested in size just for its own sake but rather want to see credible operational synergies on-field.
The Permian, North America's most important shale formation, has also seen a lot of its premium assets snapped up in this M&A frenzy. This leaves behind acreages which aren't very viable at the low oil prices currently in place.
This makes it even more difficult to negotiate, because buyers are careful not to overpay for inferior assets.
Raoul LeBlanc is VP of S&P Global Commodity Insights.
Big Players Stay Cautious
Even the largest players show restraint.
Exxon Mobil is focused on creating value after its recent $60 billion Pioneer deal.
"One plus one must equal three," said CEO Darren Woods during a recent earnings conference, highlighting the importance of any deal creating outsized value.
Some people are still digesting their recent purchases.
Van't Hof, referring two large Permian basin purchases, said: "We've been busy for the past year and a quarter with Endeavor" and Double Eagle.
(source: Reuters)
