After a slowdown in 2025, US oil and gas deal-making this year will likely be led by more tie-ups between smaller peers looking to build scale to remain viable, and others seeking to capitalise on a resurgence in natural gas demand tied to LNG.
The total value of US upstream mergers and acquisitions (M&A) came in at around $65bn last year, according to consultancy Enverus, down from the record-breaking pace seen in the previous two years that saw about $300bn in transactions altogether. Some analysts expect this year will see more combinations between smaller rivals that missed out on the earlier consolidation round, driven by a need to cut costs and bolster inventory in an era of lower crude prices and an increasingly uncertain macroeconomic backdrop. And natural gas could well attract increasing amounts of interest on the back of rising LNG exports and the vast power needs of data centers fuelling the artificial intelligence boom.
M&A activity has reverted to a more typical mix of corporate and asset transactions, after the M&A spree of recent years that was dominated by large-scale acquisitions and centred on the highly sought after Permian basin. Average deal values have also come back to earth with a bump, and potential acquirers have started to look outside the increasingly congested Permian to other basins that were largely overlooked up until now and may offer better value.
"We'll probably continue to see some consolidation plays here and there, and then a lot of it will just be continued activity around companies rebalancing or looking at their portfolios and trading assets," consultancy EY-Parthenon partner Bruce On says. One bright spot of late has been private capital showing greater interest in returning to the sector for the first time in a few years. "That's been a welcome trend," On says. "It's not just in the infrastructure space, but they're looking in the upstream space as well."
Meanwhile, Enverus expects more deals will be negotiated as public companies that were active in the most recent M&A round seek to fine-tune their portfolios and divest non-core assets. "There seems to be a strong appetite for these assets that we don't see fading anytime soon," Enverus analyst Andrew Dittmar says. "Buyers are also going to continue hunting for opportunities to get long gas, ideally in assets with Gulf coast/LNG exposure, but they are willing to cast a wide net and look at other sources of supply as well."
Private party
A substantial backlog of private equity commitments that have yet to find an asset will also help prop up the market this year. "2026 looks poised to continue a robust acquisitions and divestitures market with the potential for more corporate consolidation, if at a slower pace than over the last few years," Dittmar says.
A new wave of deal-making could be on the cards for small and medium-sized operators as they seek to drive efficiencies and build scale, according to analysts at consultancy Rystad Energy. But these firms may have limited options for achieving their goals as the M&A market gets increasingly competitive.
Small and medium-sized firms could snap up assets bigger firms are looking to ditch, but these may lack quality inventory and significant production value, Rystad says. Alternatively, they could go after privately owned companies, according to the consultancy. "Neither this option nor private acquisitions would be able to truly move the needle for smaller buyers," Rystad vice-president of oil and gas M&A Atul Raina says. The answer may be for smaller firms to team up and chase deals within their peer group in so-called mergers of equals. "This is a likely shift in strategy due to the scarcity of opportunities and an ever-evolving menu of acquisition options," Raina says.
