U.S. Oil Mergers Drop To $12 Billion As Volatility Limits Deals

U.S. oil and gas dealmaking fell to $12 billion last quarter, down from the first quarter and nearly a third of the $34.8 billion in the same period a year ago, as commodity price volatility left buyers and sellers clashing over asset values, according to data released by energy analytics firm Enverus on Thursday.

"The spike in commodity prices that followed Russia's invasion of Ukraine temporarily stalled M&A as buyers and sellers disagreed on the value of assets," said Andrew Dittmar, a director at Enverus Intelligence Research.

U.S. benchmark crude oil futures prices surged to more than $123 a barrel in early March following Russia's invasion of Ukraine, but prices have since cooled as recession worries moved to the forefront.But last quarter's high prices prompted M&A interest from private equity firms and spurred some deals, Dittmar said. Private equity sellers made up about 80% of quarter's total deal value, Enverus data showed.

PRICE RESISTANCE

This year's oil prices have led to a rush among private investors to put properties across the U.S. shale patch on the market, Dittmar said.

"The challenge is finding buyers willing to pay their asking prices," Dittmar added.

The Permian Basin of west Texas and New Mexico accounted for 46% of last quarter's deal value, making it the most active oil and gas region in the United States. The Rockies followed with 12%, Midcontinent with 6%, U.S. Gulf Coast with 5% and the West Coast with 2%, according to Enverus data. The offshore Gulf of Mexico, eastern United States and Alaska did not register deals.

About a third of the total deal value came from a merger between private Colgate Energy Partners III and Centennial Resource Development.

Other top deals by price last quarter included a $1.3 billion agreement between Grey Rock Investment Partners and Executive Network Partnering Corp to form Granite Ridge Resources.