US energy sector builds on $230b deals from 2023 to continue 'Shale 4.0' boom

The consolidation trend in the US energy sector led, named 'Shale 4.0' by Rystad Energy, to over US $230 billion in deals in 2023, the most in real 2023 dollars since 2012, according to the US Energy Administration Information (EIA).

This trend continues into 2024 year as companies seek to utilise their cash reserves and enhance their assets. In the Permian Basin, a hub of US oil production, industry executives predict more large-scale deals in the coming months. Analysts and industry executives alike expect the consolidation drive to persist throughout 2024, with the potential for more mega-deals akin to Exxon-Pioneer.

According to a December survey by the Federal Reserve Bank of Dallas, most energy executives anticipate additional oil deals valued at $50 billion or more to emerge over the next two years. 

Enverus data showed that around 39 private companies were acquired by public companies in 2023.

The largest deal this year so far is Chevron's acquisition of Hess Corporation, though it is expected to close in 2025 because of ExxonMobil's arbitration, followed by Diamondback Energy purchase of Endeavor Energy, bringing their combined production to 816,000 barrels of oil and gas per day (boepd).

The EIA noted in a report release in March 2024 that the current wave of M&A activity marks a return to pre-2020 consolidation trends. The period from 2020 to 2022 saw a downturn in transactions due to market volatility and uncertainties in demand and supply. However, 2023 witnessed a resurgence in deal-making, highlighted by several multi-billion dollar all-stock transactions involving industry giants like ExxonMobil.

According to Enverus Intelligence Research (EIR), the US upstream oil and gas industry recorded its biggest-ever quarter for M&A in the fourth quarter of 2023, with deals worth a total of $144.28 billion.