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Strategic acquisitions of premier assets and the drive for efficiency and scale led to a stellar year for mergers and acquisitions in the U.S. oil and gas industry in 2024.
Following a 331% surge in deal value to $206.6 billion last year, the number of the top publicly traded exploration and production companies in the American oil and gas sector has declined from 50 to just 40, Ernst & Young LLP said in a new study published this week.
Despite the smaller number of the top players, the resulting 40 large listed U.S. oil and gas firms continued to account for about 41% of America’s oil and gas production, EY said.
This highlights the industry trend that the companies active in M&As were looking at strategic consolidation and access to advantaged resources that add scale and efficiency to their portfolios.
“Fewer, stronger players are emerging, and they are better capitalized, more efficient and laser-focused on resilient growth,” said Pat Jelinek, EY Americas Oil & Gas and Chemicals Leader.
“The new top 40 companies aren’t just survivors; they’re poised to shape the future of American energy.”
Capital allocation strategies among the big players shifted to more funds for M&As in 2023 and 2024, as companies accelerated strategic asset repositioning for long-term growth.
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Last year, 42% of the value of the acquired assets was allocated to unproved properties, up from just 18% in 2023. This suggests “a clear intent to build future drilling inventory and secure long-term production potential,” EY said.
The $206 billion worth of deals in 2024 was largely driven by mega mergers and acquisitions, including Exxon’s $60-billion acquisition of Pioneer Natural Resources, Diamondback Energy’s purchase of Endeavor Energy for $26 billion in cash and stock, and the $22.5-billion ConocoPhillips acquisition of Marathon Oil.
Five megadeals of more than $10 billion in value helped lift the 2024 deal value by 331% compared to 2023, EY noted in its report.
With the shift of capital toward M&As, exploration and development costs declined 7% year-over-year, according to EY’s study of SEC-reported data from the 40 largest publicly traded oil and gas companies, as determined by their 2024 year-end U.S. oil and gas reserves.
Despite the decline in exploration and development costs, production replacement rates remained strong, exceeding 100% from finding and development (excluding revisions). This demonstrates “the sector’s ability to grow reserves even while spending less on traditional exploration,” EY noted.
But the stellar M&A year is now behind us, and U.S. firms are turning their focus on how to navigate the many new uncertainties in the macro environment this year.
“With ongoing uncertainty around supply and demand, pricing, tariffs, and geopolitics, operational efficiency and capital discipline will be critical,” said
Herb Listen, lead author of the study and Oil & Gas Assurance Partner at Ernst & Young LLP.
“The companies that adapt quickly, invest strategically and integrate effectively will define the next chapter of U.S. energy.”
M&A activity in the U.S. upstream sector hit the brakes in the second quarter of 2025 amid volatile energy commodities and equity markets, Enverus said in its quarterly report last month.
The wild swings in oil prices due to the U.S. trade policy and the Israel-Iran war added to emerging constraints for M&As, such as a lack of remaining attractive opportunities for the listed companies, especially in the Permian, said Andrew Dittmar, principal analyst at Enverus Intelligence Research (EIR).
“The engine of M&A over the last few years has sputtered and stalled, given there are just a few remaining targets,” Dittmar added, noting that “the race to add economic locations is pushing buyers into a more geographically diverse set of deals.”
By Tsvetana Paraskova for Oilprice.com
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