The U.S. shale industry reported $12 billion in mergers and acquisitions for the quarter ending September 30, marking the lowest total in six quarters, according to Enverus Intelligence Research.
Andrew Dittmar, a principal analyst at Enverus, highlighted a shift in the market as some of the biggest buyers are now selling assets. Notably, Occidental Petroleum (NYSE: OXY) sold properties for $818 million to Permian Resources (NYSE: PR). Additionally, APA Corp. (NASDAQ: APA) divested older properties to an undisclosed buyer. Dittmar stated that “upstream M&A was bound to drop” after a record $192 billion in deals in 2023, mainly concentrated in the Permian Basin of West Texas.
Among the significant transactions in the quarter, Devon Energy (NYSE: DVN) announced its plan to acquire Grayson Mill Energy’s Williston Basin business. This cash-and-stock deal is valued at approximately $5 billion, with $3.25 billion in cash and $1.75 billion in stock. The acquisition will add 307,000 net acres (with a 70% working interest) to Devon’s portfolio, greatly enhancing its presence in the Williston Basin. Production from these properties is projected to reach around 100,000 barrels of oil equivalent per day (55% oil) by 2025. Devon expects to save up to $50 million annually in cash flow through marketing synergies and operational efficiencies due to this increased scale.
Currently, Devon produces 375,000 barrels of crude oil per day, with total production averaging 765,000 barrels of oil equivalent per day across its various assets. The company has also announced a 67% increase in its stock buyback authorization to $5 billion, citing the transaction’s positive impact on free cash flow.
In a separate development outside the shale sector, Arch Resources Inc. (NYSE: ARCH), based in St. Louis, and Consol Energy Inc. (NYSE: CEIX), located in Canonsburg, Pennsylvania, announced an all-stock “merger of equals.” This deal, valued at $5.2 billion, will create a new entity called Core Natural Resources. Under the terms of the merger, shareholders of Arch Resources will receive 1.326 shares of Consol common stock for each share of Arch common stock they own.
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