Oil & Gas Mergers and Acquisitions report—Yearend 2018

Unrealized oil and gas M&A potential

Despite promising market conditions during most of 2018, a strong oil and gas industry did not realize its potential for increased mergers and acquisitions (M&A) activity because it remained financially constrained in a context of continued caution. However, the industry saw several records in 2018 and deployed creative dealmaking. Well-capitalized buyers will be best positioned to drive M&A activity in 2019.

What’s ahead for M&A in oil and gas?

With deteriorating market conditions on the horizon, caution and closed equity markets will likely continue to shape M&A activity in 2019. Several trends seen in 2018 will likely play out over the course of the next year:

  • US shale production is set to grow, but it may be undercut by falling prices, infrastructure constraints, and/or a demand slump—upstream companies will need to remain financially prudent and continue delivering sustainable returns to shareholders.
  • Oilfield services (OFS) companies, still struggling to regain lost margins, are under the most pressure to consolidate, especially to seize lucrative offshore opportunities.
  • As infrastructure bottlenecks ease, midstream and downstream players will need to be cautious about overcapacity risk.

2019 holds promise for well-capitalized players, as well as consolidation to drive dealflow, which may remain muted as the return of confidence is delayed. To be ready for 2019, it is important to take stock and gain a better understanding of 2018 oil and gas M&A activity. Download the report to take a deeper look.

Oil & Gas Mergers and Acquisitions report—Yearend 2018

Looking back at 2018: M&A in oil and gas

M&A activity lagged, even as commodity price conditions improved in the first three quarters of the year, with shareholders demanding discipline in capital spending. A return to price volatility and falling oil stock prices at the end of the year renewed caution. Several trends stood out:

  • While upstream deal count and value fell, interest in shale plays outside the high-priced Permian Basin grew, especially in the Eagle Ford and SCOOP/STACK.
  • Infrastructure bottlenecks drove the increased value in midsteam and downstream dealmaking, but they derailed OFS growth plans.
  • Consolidation and optimization continued to be a major driver of deal flow in 2018, reflecting an organic, low-risk growth strategy.

The four-year buildup in oil prices and confidence both culminated and collapsed in 2018, sapping an incipient return of confidence. However, the valuation gap between buyers and sellers may shrink in 2019, and there is potential for large and liquid oil and gas players to ride the cycle and capitalize on a likely shift to a buyer’s market.

Listen to our related podcast: Trends in oil and gas M&A

View past Oil & Gas Mergers and Acquisitions reports

Yearend 2017: Working under pressure

Despite higher prices and a nascent recovery across the oil and gas industry, overall mergers and acquisitions (M&A) activity declined year over year in 2017. However, there were a number of high profile transactions across the upstream, midstream, and downstream sectors, and more positive fundamentals could generate significant deal opportunities in 2018 as the industry continues to work under pressure.

Midyear 2017: Overcoming the headwinds

Global oil and gas mergers and acquisitions were on the upswing during the first half of 2017. Do the trends driving increased M&A activity signal a sustained global oil and gas market recovery? What factors should the industry watch in the second half of the year to assess the strength of the recovery?

Yearend 2016: Out of the starting blocks

Price downturns and bankruptcies in 2016 didn’t impact the oil and gas industry as much as predicted. In fact, M&A deal value recovered to exceed 2014 and 2015 levels. With prices recovering, what is the outlook for 2017? Read our trends and predictions for oil and gas M&A and discover how your business will be impacted.

Midyear 2016: Looking for a restart

The report covers the first half of 2016 deal activity for each sector of the oil and gas industry, examining overarching trends and highlighting individual deals for discussion. Understanding the strategies behind energy sector M&A participants will give some insight as to what to expect for the rest of 2016 and beyond.

Yearend 2015: Waiting for a rebound

The decline in commodity prices has affected all sectors of the oil and gas industry, and mergers and acquisitions (M&A) activity has hit the lowest levels in years. There was a rise and fall during 2015, but expectations for an uptick on deals did not come to fruition. What can this mean for the oil and gas industry in 2016?

Midyear 2015: Adjusting to the new reality

For the oil and gas industry, the M&A deal market recovered somewhat in the second quarter of 2015, both in terms of number of transactions and overall value relative to the first quarter, due in part to the announcement of one large international deal.

Yearend 2014: A world in flux

For the oil and gas industry, the M&A deal market in 2014 started stronger than 2013 and with a total year-end deal value of about $350 billion, surpassed 2013 by $130 billion. By July 2014, however, deal making began to slow before plummeting late in the year along with global oil prices.

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