Oil M&A Is Hot. Here are Some Possible Targets
Diamondback Energy made waves in the energy market this week with its $26 billion acquisition of private oil and gas producer Endeavor. This move has solidified Diamondback’s position as one of the leading drillers in the Permian Basin of Texas and New Mexico. The energy industry’s merger and acquisition trend has been on fire in 2024, with a whopping $40 billion in deals already signed.
Industry analyst Leo Mariani stated, “I would say probably the most attractive targets have been bought.” However, Mariani believes that there may still be opportunities in the market for smaller acquisitions, particularly in the natural gas sector. This sentiment is supported by the recent Chesapeake Energy deal to acquire Southwestern Energy, which aims to establish a dominant player in the natural gas market and increase gas exports from the United States.
The Diamondback-Endeavor deal follows a flurry of significant acquisitions in the energy industry. Companies like Exxon Mobil, Chevron, and Occidental Petroleum have all made notable purchases in recent times. The fourth quarter of 2023 alone saw an unprecedented $144 billion worth of deals signed for energy producers. With this impressive momentum carrying into 2024, it is clear that the market is ripe for further consolidation.
While the Permian Basin may see fewer large-scale targets due to scarcity, experts predict that other oil and gas basins could find themselves in the crosshairs of dealmakers. Diamondback’s successful acquisition has been met with enthusiasm from investors, evidenced by a 9.4% stock increase on the announcement day.
Looking ahead, Mariani suggests that several public companies with appealing assets could become acquisition targets. These include Permian Resources, Matador Resources, and HighPeak Energy. In addition, the Chesapeake deal may inspire other natural gas producers to consider mergers. Companies such as Range Resources, Antero Resources, and Comstock Resources are all potential candidates.
The energy industry’s M&A frenzy shows no signs of cooling down, and investors and market participants will be closely watching for the next big deal. As the competition heats up, it remains to be seen which players will emerge as the winners in this high-stakes game of consolidation.
This article was written based on information from Bloomberg and aims to provide journalistic coverage of the oil and gas industry’s merger and acquisition trend in 2024.
Analyst comment
Positive news. The oil and gas industry’s merger and acquisition trend is strong, with $40 billion in deals already signed in 2024. While some attractive targets have been acquired, opportunities for smaller acquisitions remain, particularly in the natural gas sector. Other oil and gas basins may become targets as the market continues to consolidate. Diamondback’s successful acquisition has led to a 9.4% increase in stock. Public companies like Permian Resources, Matador Resources, and HighPeak Energy could become acquisition targets, and the Chesapeake deal may inspire others in the natural gas market. The M&A frenzy in the energy industry is expected to continue.
