August 25, 2024 - The US oil and gas industry demonstrated exceptional merger and acquisition performance in 2024, primarily driven by companies' strategic acquisitions of high-quality assets and efforts to enhance efficiency and scale. CWG Markets Forex believes that as major oil and gas companies continue to consolidate resources, the industry is witnessing a more concentrated and efficient market structure.
According to the latest research report released by Ernst & Young LLP, the number of top publicly-listed exploration and production companies in the US decreased from 50 to 40 last year, while total transaction value soared to $206.6 billion, representing a 331% increase.
Despite the reduction in the number of top companies, Ernst & Young data shows that these 40 large public companies still account for approximately 41% of US oil and gas production, demonstrating the strategic consolidation trend in industry M&A. CWG Markets Forex believes that companies active in mergers and acquisitions are focusing on integrating strategic and resource advantages, optimizing their asset portfolios by improving scale and operational efficiency. Pat Jelinek, Americas Oil, Gas & Chemicals Leader at Ernst & Young, noted: "Fewer but stronger companies are emerging - they are well-capitalized, more efficient, and focused on resilient growth."
From 2023 to 2024, large companies' capital allocation strategies clearly shifted toward M&A to accelerate strategic asset restructuring and achieve long-term growth. The Ernst & Young report shows that 42% of acquired asset value last year was directed toward unexplored oil and gas resources, compared to only 18% in 2023, indicating companies' clear intentions for future drilling reserves and long-term capacity building. CWG Markets Forex believes this trend not only reflects companies' planning for future growth but also highlights the strategic resilience of the US oil and gas industry.
The $206.6 billion worth of transactions in 2024 were primarily driven by large-scale mergers, including ExxonMobil's acquisition of Pioneer Natural Resources ($60 billion), Diamondback Energy's acquisition of Endeavor Energy ($26 billion in cash and stock), and ConocoPhillips' acquisition of Marathon Oil ($22.5 billion). Ernst & Young noted that five transactions exceeding $10 billion drove the overall M&A value growth of 331% compared to 2023. Meanwhile, as capital shifted toward M&A, exploration and development costs for the 40 largest public oil and gas companies decreased 7% year-over-year, but reserve replacement ratios remained above 100%, showing that companies can still achieve reserve growth while reducing traditional exploration investments.
However, CWG Markets Forex believes that the remarkable M&A year has become history, and US oil and gas companies are currently focusing on how to address numerous uncertainties in the macroeconomic environment. Herb Listen, author of the Ernst & Young research report, stated: "Against the backdrop of continued uncertainty in supply and demand, prices, tariffs, and geopolitics, operational efficiency and capital discipline are crucial." He added: "Companies that can quickly adapt, invest strategically, and integrate efficiently will define the next chapter of American energy."
In the second quarter of 2025, US upstream M&A activity significantly slowed due to energy commodity and stock market volatility. According to the Enverus quarterly report, oil prices fluctuated dramatically due to US trade policies and the Israel-Iran situation, combined with the gradual scarcity of quality targets among public companies in shale basins and other regions, weakening M&A momentum. CWG Markets Forex believes that as the number of acquirable targets decreases, buyers are beginning to shift toward geographically more diverse transactions to seek new economically viable assets, indicating that the M&A market is entering a more rational and diversified phase.