There were a number of large blockbuster deals announced in 2023, Niki Roberts, an attorney at Hogan Lovells, told Rigzone, referring to U.S. oilfield merger and acquisition (M&A) activity.
“In 2024, we’re seeing deal activity in growth markets and an optimization of asset holdings,” Roberts said.
“Clients are being strategic about overhead and portfolio continuity and working to tell a story about their assets and balance sheets,” she added.
Roberts told Rigzone that there are “significant impacts on M&A in the oilfield; interest rate concerns, geopolitical tensions, and a number of significant elections”.
“Although multiple companies have announced reduced drilling budgets and are dropping rigs and frac crews, in general, oilfield M&A seems steady for early 2024,” Roberts noted.
The Hogan Lovells representative told Rigzone that hiring is generally slow in this market, highlighting that there have been some announced layoffs.
“Companies have publicly stated that jobs will be impacted given current drilling and development forecasts,” Roberts said.
“Low natural gas prices are impacting rig counts and asset development, although the past week has shown some growth. Hiring at the end of 2023 was slow and so far in 2024, appears down,” Roberts warned.
The Hogan Lovells attorney also stated that, “if companies continue to batten the hatches against depressed prices, there may be a slowing in M&A activity for the rest of the year as deal teams continue to try and reduce costs, focus on developing assets, and plan for the upswing”.
Hogan Lovells highlights on its site that it has extensive representative experience in the oil and gas industry.
It was the sole project counsel on the $45 billion Shah Deniz Project, advised ExxonMobil on the $1.75 billion sale of all North Sea assets to Apache North Sea Ltd, represented Pertamina on the $1.75 billion acquisition of three Algerian oil and gas blocks from ConocoPhillips, and advised Great Western Oil and Gas Company on the acquisition of various upstream oil and gas assets in DJ Basin and Montana valued at over $1 billion, Hogan Lovell’s site shows.
In a release sent to Rigzone last month, Enverus Intelligence Research (EIR), a subsidiary of Enverus, which describes itself as the most trusted generative AI and energy-dedicated SaaS company, outlined that there were $51 billion worth of announced deals in U.S. upstream M&A in the first quarter of this year.
EIR highlighted in the release that this figure followed last year’s “blockbuster $192 billion in U.S. upstream consolidation”.
“However, EIR is pumping the brakes on another record-setting year as deal activity has slowed significantly in March and Q2 appears to have already lost momentum,” it warned.
“Deals at the start of 2024 were driven by the same factors that led to last year’s marathon of mergers, foremost among them a desire to lock up high-quality inventory when it is available,” Andrew Dittmar, a principal analyst at EIR, said in the release.
“Most of that inventory is going to be found in the Permian, so it is unsurprising the prolific basin was yet again the primary driver for M&A within oil and gas,” he added.
In a separate release sent to Rigzone at the end of April, Rystad Energy revealed that global M&A deal value had crossed the $64 billion mark already this year.
“It represents the strongest first-quarter performance since 2019 and a 145 percent increase on the first quarter of 2023, fueled primarily by consolidation in the U.S. shale patch,” the company said in the release.
“Deals in North America totaled $54 billion in the first quarter of the year, about 83 percent of the worldwide total, with the region continuing to be the driving force for the remainder of 2024, with nearly $80 billion of assets still on the market,” it added.
“The U.S. shale sector is expected to be the engine driving this activity, accounting for 66 percent or slightly more than $52 billion of assets on the market,” it continued.
Rystad stated in the release that the Permian Basin has dominated recent dealmaking but added that other shale plays look set to attract significant investments in the near future, “with about $41 billion of non-Permian opportunities on the market”.
To contact the author, email andreas.exarheas@rigzone.com
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