oil and gas m&a

Analysis

2021 oil and gas M&A outlook

Consolidation through the price cycle 

COVID-19 greatly affected the oil and gas industry as demand for energy declined and revenues decreased substantially, leading to a pullback in capital spending and lower M&A activity. Despite these challenges, 2021 could be a period of growth and transformation as companies push to boost margins, cut emissions, and prepare for the energy transition.

How COVID-19 undermined market fundamentals

Businesses across several industries faced a challenging 2020 following the spread of COVID-19 and subsequent decline in economic activity. And the oil and gas industry has been one of the hardest hit by the pandemic, with energy industry revenues declining by 54%.There were only 258 deals across the sector in 2020, the lowest number in more than a decade. Deal value fell below $30 billion in the first half of the year, also the lowest in the decade, but rebounded to almost $170 billion in the second half. The impact was felt across all segments, with oilfield services (OFS) being hit the hardest.Though market fundamentals have improved rapidly since May lows, the recovery has been uneven. Fuel demand, commodity prices, and therefore oil and gas activity will likely not fully recover until broader economic activity returns to pre–COVID-19 levels. However, based on recent vaccine announcements, we presented in our Q4 US economic forecast that the United States could begin to normalize through 2021 as retail, restaurant, and industrial activity bounces back, though uncertainty remains depending on if there is continued economic relief.

Four trends that could drive deal activity in 2021

Oil and gas deals by segment

Download the full outlook to drill down into these oil and gas M&A trends

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