Transactions in the upstream sector of oil and gas in the United States have reached their highest level.

Automated translation by Reuters using machine learning and AI. Please refer to the following disclaimer: https://bit.ly/rtrsauto
by Georgina McCartney

The transaction volume in the U.S. upstream oil and gas sector surged to $38 billion (XX,XX billion euros) in the first quarter of this year, reaching its highest quarterly level in two years, analytics firm Enverus announced on Wednesday. Shale producer Devon DVN.N and its smaller rival Coterra finalized their merger agreement last week after announcing their intention to merge in February. This $25 billion (XX,XX billion euros) deal represented the lion’s share of transactions in the first quarter.

Both companies operate on multiple shale formations and are present in the Delaware portion of the Permian Basin in Texas and New Mexico, as well as the Anadarko Basin in Oklahoma.

Transactions significantly slowed down in March as crude oil price volatility surged following the American-Israeli strikes against Iran in February, triggering a broader conflict in the Middle East and disrupting maritime traffic in the Strait of Hormuz.

Since the war began on February 28, Brent crude futures contracts, the global benchmark, have fluctuated between a low of $77.74 per barrel and a high of $118.35.

However, the rise in oil prices is expected to pave the way for a recovery in transactions by allowing more private exploration and production companies to come up for sale, while also encouraging further consolidation, according to Enverus.

“The market is entering a temporary wait-and-see phase as volatility clouded oil price outlooks, but the arguments for higher oil prices over a longer period are strengthening and creating conditions for a rebound in mergers and acquisitions,” said Andrew Dittmar, senior analyst at Enverus Intelligence Research.

“We are likely heading towards a new wave of consolidation as rising oil prices stimulate both the entry of private companies into the market and the appetite of publicly traded exploration and production companies for transactions, whether it’s corporate consolidation or sales of private assets,” he added. Other notable transactions include Mitsubishi’s acquisition of Aethon Energy for $7.6 billion (XX,XX billion euros), marking the largest transaction ever completed by the Japanese company as it seeks to strengthen its gas supply chain.