KUALA LUMPUR (April 30): After the biggest first quarter for global upstream dealmaking in five years, the industry could see another US$150 billion (RM714.6 billion) of merger and acquisition (M&A) deals in the remainder of 2024, according to Rystad Energy Research.
In a statement on Monday, the Oslo-based energy consulting firm said that with global M&A deal value crossing the US$64 billion mark already this year, it represents the strongest first-quarter performance since 2019 and a 145% increase on the first quarter of 2023, fuelled primarily by consolidation in the US shale patch.
Rystad Energy said deals in North America totalled US$54 billion in the first quarter of the year, about 83% of the worldwide total, with the region continuing to be a driving force for the remainder of 2024, with nearly US$80 billion of assets still on the market.
It said the US shale sector is expected to be the engine driving this activity, accounting for 66% or slightly more than US$52 billion of assets on the market.
Rystad Energy said the Permian Basin has dominated recent dealmaking, but other shale plays look set to attract significant investments in the near future, with about US$41 billion of non-Permian opportunities on the market.
It said this includes the potential sale of Bakken-focused Grayson Mill Energy, Uinta-focused XcL Resources, ExxonMobil's Bakken portfolio, EQT's remaining non-operated Marcellus portfolio and certain Haynesville assets from Shell and BP.
ExxonMobil, Chevron, Occidental Petroleum (Oxy) and Diamondback Energy portfolio adjustments are set to invigorate short-term M&A activity.
These companies have all made significant recent acquisitions and now plan to divest non-core assets, paving the way for growth among regional upstream players.
For instance, Chevron intends to divest approximately US$10 billion to US$15 billion of assets by 2028, while Oxy plans to divest between US$4.5 billion and US$6 billion.
Rystad Energy upstream research vice president Atul Raina said the Permian has been the focal point for M&A activity in recent times, but that focus is waning as available assets in the basin become scarce.
“But with appetite still strong, deal-hungry players are looking outside the basin for acquisitions.
“A power shift could be on the cards, with non-Permian assets taking center stage in the future North American deals pipeline,” said Raina.