In recent years, the global oil and gas market has become increasingly volatile and complex. Following the COVID-19 pandemic, sluggish global economic recovery, turbulent energy transition "mega-transformation," and elevated regional geopolitical risks have driven international oil prices to fluctuate in short cycles with wide amplitude around the $60-80/barrel range, also pushing the global oil and gas asset M&A market to exhibit new trends.

**International Oil Companies Strengthen Asset M&A to Consolidate Upstream Resource Strategy**

Upstream exploration, as the primary method of "organic growth" for oil companies, is crucial for ensuring future oil and gas reserve and production growth. However, since the 2014 international oil price collapse, global oil and gas exploration investment has continued to shrink. Over more than a decade, the decline has reached up to two-thirds, creating hidden dangers for the industry's medium to long-term sustainable development.

According to S&P Global statistics, in 2024, 197 conventional oil and gas discoveries were made globally, adding approximately 1.262 billion tons of oil equivalent in recoverable reserves, down 15% year-on-year. Against this backdrop, intensifying oil and gas asset M&A activities has become an important measure for some international oil companies to consolidate their upstream resource strategies.

For example, after Chevron completed its acquisition of Hess Corporation, it gained substantial high-quality upstream assets in Guyana's deepwater, the US domestic Bakken shale play, the US Gulf of Mexico region, and parts of Southeast Asia. Its global oil and gas production, based on 3.3 million barrels of oil equivalent per day in 2024, is expected to grow to 4 million barrels of oil equivalent per day by the end of 2025 and reach a peak level of 4.5 million barrels of oil equivalent per day around 2028. This move helps maintain Chevron's second-place ranking in oil and gas production among the seven major international oil giants.

**Oil and Gas Asset M&A Activities Focus on Key Regions and Sectors**

Global oil and gas exploration and development activities are accelerating toward "deep water, deep earth, and unconventional," driving international oil companies' upstream asset M&A to continue focusing on key regions and sectors.

From a regional perspective, the Permian Basin has become the core area for stable and increased US shale oil production. Through acquiring Pioneer Natural Resources Company, ExxonMobil gained approximately 2.4 billion barrels of oil equivalent in scale reserves in the Permian-Midland Basin. Some of these shale oil and gas assets have full costs below $35 per barrel of oil equivalent, recognized as the lowest level in the US domestic market. Moreover, some shale oil and gas asset projects have payback periods of only 2 years, which has positive significance for effectively helping ExxonMobil respond to future global energy market transformation and international oil and gas market volatility.

From a sectoral perspective, on June 16, 2025, Abu Dhabi National Oil Company announced plans to acquire Australian oil and gas production giant Santos for $18.7 billion. Its strategic vision is to fully utilize Santos' three world-class LNG projects located in Australia, Papua New Guinea, East Timor, and the United States to form a more effective and advantageous natural gas business full industrial chain combination, consolidating its influence in global and regional LNG markets.

**Some Oil and Gas Asset M&A Shows Horizontal and Vertical "Integration" Trends**

From the perspective of upstream asset "horizontal" synergy, taking Chesapeake Energy's acquisition of Southwestern Energy as an example, after transaction completion, Chesapeake's main assets further concentrated in the Haynesville shale play and Marcellus shale play, facilitating upstream asset synergy effects. Among these, Chesapeake gained larger-scale continuous development acreage in the Haynesville and Marcellus shale plays. This both facilitates implementing longer horizontal well drilling to reduce development costs and enables lowering overall project operating costs through more effective utilization and sharing of existing infrastructure such as gathering pipelines and water management facilities.

From the perspective of "vertical" integration of upstream and midstream assets, through acquiring Equitrans Midstream Company, EQT Corporation gained over 3,000 miles of pipelines, 8 billion cubic feet per day of gathering capacity, and over 43 billion cubic feet of gas storage capacity, gradually achieving "vertical integration" operations combining shale gas development-focused upstream development business with midstream natural gas storage and transportation business.

EQT Corporation President and CEO Toby Z. Rice stated that this acquisition was "the most strategic and transformational transaction in EQT's history" and "can vertically integrate the world's highest-quality natural gas resource base."

**North American Unconventional Natural Gas Asset M&A Activities Become More Active**

The expectation of significant near to medium-term growth in regional natural gas demand is the main reason driving increasingly active North American unconventional natural gas M&A transactions. According to the US Department of Energy's research report "Energy, Economic and Environmental Assessment of US LNG Exports," continued growth in US LNG projects will lead US domestic consumers to face "triple pressure" of increased natural gas demand, rising natural gas prices, and rising natural gas power generation prices. On the other hand, artificial intelligence, data centers, and other technological developments' demand for US electricity will also drive continued substantial growth in natural gas demand in the power generation sector.

From an amount perspective, North America completed related transactions worth $20.2 billion in 2024, a substantial 52% increase from $13.3 billion in 2023, also approaching the highest level since 2016. From a project perspective, unconventional natural gas assets occupy important positions in "mega-mergers" with transaction amounts exceeding $5 billion or even $10 billion, such as ExxonMobil's acquisition of Pioneer Natural Resources, Chesapeake's acquisition of Southwestern Energy, and ConocoPhillips' acquisition of Marathon Oil. Related North American oil companies hope to both gain scale effects in unconventional natural gas development within the same basin through M&A activities and achieve diversified "cross-basin" unconventional natural gas asset allocation through M&A transactions.

**International Oil Companies' Asset M&A Decisions Will Become More Cautious**

As global climate and environmental governance accelerates, the oil industry faces enormous pressure from energy transition, and oil companies' traditional upstream business operations become increasingly difficult each year. On one hand, some countries and regions are continuously strengthening policy constraints on traditional fossil energies like oil and gas. For example, based on the EU's implementation of a 45 euros per ton carbon tariff policy, Middle Eastern crude oil's competitiveness in European markets will decline by 20%, forcing oil-producing countries in the region to increase investment in low-carbon sectors like hydrogen energy.

On the other hand, significantly increased electrification in the transportation sector has directly suppressed crude oil demand. Taking China as an example, from 2022 to 2024, national electric vehicle sales were 6.88 million, 9.49 million, and 12.86 million vehicles respectively, with 2025 sales predicted to possibly exceed 15 million vehicles, which will significantly impact gasoline demand.

Uncertainty about the medium to long-term development prospects of oil and gas business negatively impacts upstream investment growth. According to Rystad Energy statistics, global oil and gas upstream investment has remained below the peak level reached in 2014 for the past five years. Overall reduced upstream investment will force international oil companies to become more cautious about asset M&A decisions.

This may lead to significant polarization in the M&A market: a few high-quality oil and gas assets will be fiercely competed for, pushing the number of "mega-mergers" with transaction amounts exceeding $5 billion to increase; while most oil and gas assets with relatively poor resource endowments and high prices face being ignored.

Chinese oil enterprises should further recognize new trends in global oil and gas asset M&A market development, fully learn from international oil companies' operational experience, and continuously improve the development quality and efficiency of upstream business. First, strengthen research work related to overseas oil and gas asset M&A. In research directions, focus on core regions, low-carbon assets, financial improvement, and risk prevention; in specific content, strengthen tracking and forecasting of international oil prices, tracking and evaluation of potential M&A transaction assets, and tracking research of macroeconomic environmental factors that may affect M&A transaction activities. Second, based on research, cautiously strengthen acquisition of overseas high-quality upstream assets. Leverage Chinese oil enterprises' upstream sector advantage of relatively abundant free cash flow under current oil price levels, utilize oil and gas resource M&A markets, and increase M&A efforts for overseas "integrated" high-quality oil and gas exploration and development assets. Third, strengthen exploration and strategic deployment oriented toward future transformation. Combine new energy projects such as photovoltaic, solar thermal, and offshore wind power with upstream oil and gas exploration and development technologies. Based on their own advantages, formulate strategic goals, roadmaps, time nodes, and specific strategies for future energy transformation, and persistently promote implementation.

**Selected 2025 International Oil and Gas Market M&A Cases**

**Saudi Aramco Expands into Philippine Retail Market (February)** Saudi Aramco acquired a 25% stake in Unioil Petroleum Philippines, the Philippines' third-largest oil company, through strategic investment, marking its first entry into the Philippine retail fuel market. Unioil operates 165 gas stations and 4 oil storage terminals in the Philippines, with Saudi Aramco planning to supply Valvoline lubricants and low-carbon fuel products to some of Unioil's stations.

**Saipem and Subsea7 Announce Merger (February)** Italy's Saipem and Norway's Subsea7 reached a merger agreement to create Saipem7, a global leading energy services company. The new company will have over 45,000 employees, operations covering more than 60 countries, a construction fleet exceeding 60 vessels, and business covering various offshore operations from shallow to ultra-deep water.

**ADNOC and OMV Merge Polyolefin Assets (March)** Abu Dhabi National Oil Company and Austria's OMV announced the merger of their subsidiaries Borouge and Borealis to establish new company Borouge Group International. The new company will acquire Canadian plastic producer Nova Chemicals for $13.4 billion (including debt), integrating Borealis, Borouge, and Nova Chemicals' businesses to possess the world's most complete polyolefin industrial chain.

**ADNOC Acquires Mozambique Natural Gas Interest (April)** Abu Dhabi National Oil Company's subsidiary XRG acquired Galp's 10% interest in Mozambique's Rovuma Basin Block 4 for $1.2 billion. Through this acquisition, XRG will participate in multiple key LNG projects, including the Coral South floating liquefied natural gas production, storage and offloading (FLNG) project, Coral North FLNG project, and Rovuma LNG onshore development project.

**Baker Hughes Acquires CDC (June)** Baker Hughes will acquire leading safety-critical pressure management solutions provider Continental Disc Corporation (CDC) for $540 million cash. CDC designs and manufactures rupture discs, rupture disc holders, rupture disc indicators, pressure and vacuum safety valves, flame arresters and explosion preventers, and related safety products. These products are highly complementary to Baker Hughes' control valves and high-pressure safety valve products, widely used in oil and gas industries.

**Chevron Completes Mega-Merger with Hess (July)** Chevron officially acquired shale oil company Hess through a $53 billion all-stock transaction. Through this merger, Chevron gained a 30% interest in Guyana's Stabroek oil field, with recoverable resources of 11 billion barrels of oil equivalent; expanded drilling area in the US Bakken region to 463,000 acres.

**Schlumberger Completes ChampionX Acquisition (July)** Schlumberger acquired ChampionX through a $7.8 billion all-stock transaction. This acquisition will integrate ChampionX's oilfield chemicals business with artificial lift, digitalization, and emissions reduction technologies, strengthening Schlumberger's full lifecycle oil and gas extraction service capabilities.

**Baker Hughes Acquires Chart Industries (July)** Baker Hughes acquired US industrial equipment manufacturer Chart Industries for $13.6 billion cash. Chart Industries specializes in providing gas and liquid processing equipment and services for extreme cryogenic environments. This acquisition will enhance Baker Hughes' influence in LNG and data center sectors.

**ADES Acquires Shelf Drilling (August)** Saudi oil and gas drilling contractor ADES will acquire UAE major offshore drilling contractor Shelf Drilling for $379.3 million cash. After acquisition completion, ADES will own 83 offshore self-elevating drilling platforms, achieving $40-50 million in annual operational synergies.

**Shell and Equinor Merge UK North Sea Assets (Expected completion by year-end)** Shell and Equinor announced in December 2024 the integration of North Sea oil and gas assets, with the new joint venture expected to be established by the end of 2025, taking over Shell's 9 oil fields and Equinor's 3 oil fields in the North Sea, including the Rosebank oil field, the largest new oil field under development in the North Sea region.