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Upstream merger and acquisition (M&A) activity experienced a sharp downturn in early 2025, with global deal value plunging 39% from the fourth quarter of 2024 to just $28 billion in the first quarter of 2025 – less than half the $66 billion recorded in the same period a year earlier. Although activity has picked up in Africa, Asia, and the Middle East, it is not enough to make up for North America’s dominant market share, which stood at 71% of the deal value in the first quarter of this year. As the year progressed, upstream M&A deal value for the first half of 2025 reached just over $80 billion, marking a 34% drop compared to the first half of 2024.
Although deal-making rebounded in Oceania, South America, and Europe during the second quarter and first half of 2025, it was unable to offset the sharp decline in US shale oil transactions. Consequently, North America’s share of global deal value dropped to about 51% in the first half of the year. Rystad Energy expects the decline in global upstream M&A activity to continue – except US-based shale gas plays– as macroeconomic headwinds add volatility and uncertainty to commodity prices.
The global pipeline of potential energy deals started 2025 strong at $150 billion, with $28 billion closed in the first quarter. But by July, the pipeline shrank to $119 billion, and total deals announced in the first half reached about $80 billion. The slowdown is due mainly to volatile oil prices, tariff uncertainties, higher OPEC+ production, and fewer oil-focused deals in the US shale industry. However, gas deals, especially in US shale and Canada’s Montney region, are holding up well. Outside North America, deal activity is expected to pick up in South America, Africa, and Europe.
Learn more with Rystad Energy’s Upstream Solution.
Opportunities are becoming scarce in the Permian Basin, North America’s longtime dealmaking hotspot. Valuations are rising sharply for assets with development potential, and M&A activity is shifting beyond West Texas. This shift is clearly captured when analyzing the number of deals per region as opposed to their value. As the Permian market begins to cool, exploration and production companies will turn their gaze elsewhere, as exemplified by deals such as Diversified Energy acquiring Maverick Natural Resources for nearly $1.3 billion and Citadel buying Paloma Natural Gas for $1.2 billion. Similarly, EOG Resources also acquired Utica-focused Encino Energy in May 2025.
Although a strong and profitable pipeline of upstream opportunities remains untapped in North America, US shale consolidation has likely run its course. Oil price volatility is creating uncertainty that makes it difficult for supermajors, independents, and private equity-backed operators to capitalize on what would otherwise be an attractive market.
However, the outlook for natural gas is notably stronger, driving a significant rebound in US shale gas dealmaking in early 2025. Deal values surged 30% in the first quarter, with gas representing 62% of traded resources, one of the highest quarterly share of gas in traded resources since 2022. This momentum carried into the second quarter, with gas making up around 82% of total traded resources, the highest level seen since 2019.
As a result of natural gas coming into favor, major companies are adjusting their strategies to optimize portfolios and manage risk more effectively. For example, Chevron divested its operated stake in East Texas gas assets to TG Natural Resources to streamline resources and free up capital, while Equinor acquired non-operated stakes in EQT’s Marcellus assets, gaining exposure to robust gas production without taking on full operational responsibilities or risks. These moves reflect a broader trend of companies focusing on core expertise or pursuing more capital-efficient participation in the recovering gas market.
These non-operated joint ventures allow majors and international oil companies to focus on their core operational portfolios while maintaining exposure to US shale gas, which has a positive outlook due to upcoming liquefied natural gas (LNG) projects and rising energy demand from data centers. Retaining non-operated stakes also allows majors to secure feed gas for planned off-grid power plants focused on artificial intelligence (AI),
By Atul Raina, Senior Analyst, Vice President, Upstream M&A Research, Rystad Energy
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