Upstream M&A Tops $16 Billion in 3Q22

Despite volatility and a lack of Permian transactions, diverse dealmaking from California to West Virginia yields the best quarter of 2022

CALGARY, AB, Oct. 12, 2022 /PRNewswire/ -- Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, is releasing its summary of 3Q22 upstream merger and acquisition (M&A) activity. Upstream deals in the U.S. reached more than $16 billion in transacted value during the quarter for the best showing of 2022. That was achieved despite volatility in oil and gas prices, E&P stocks still missing market recognition and a surprising dearth of deals in the usually prolific Permian.

"While the business environment for E&Ps has been mostly great in 2022, that hasn't translated to a bonanza of dealmaking," said Andrew Dittmar, director at Enverus Intelligence Research. "Companies are using the cash generated by high commodity prices to pay down debt and reward shareholders rather than seeking out acquisitions."

The challenge of paying for locations without upsetting investors, plus difficulties coming to an agreement on what those locations are worth, is why deals struggled in the inventory-rich Permian. The usual workhorse of upstream M&A saw less than 10% of total deal value directed its way in transactions focused only on that basin. Just a couple weeks into Q4, the Permian logjam has already been broken by Diamondback Energy's $1.6 billion purchase of Firebird Energy.

"There are some reasons to be positive on upstream M&A," concluded Dittmar. "Despite rising costs, E&Ps are still generating cash and some companies may decide to direct portions of that toward M&A. Additionally, OPEC looks willing to reinsert itself into oil markets, which could bring stability and help buyers and sellers come together on pricing."

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Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

SOURCE Enverus