#Canada #Calgary #Permian Basin #Enverus #upstream M&A

Upstream M&A Experiences Significant Slowdown in 2025

In the latest analysis released on July 23, 2025, by Enverus Intelligence Research, upstream merger and acquisition activity has taken a significant hit, with the total value falling to $13.5 billion in the second quarter of the year. This represents a 21% decline compared to the previous quarter and posits the first half of 2025 at a striking $30.5 billion, a substantial 60% slump compared to the same timeframe in 2024. This decline has led to concerns about the pace of M&A activity, which has been a critical component of the market over recent years.

Factors Contributing to the Slowdown

According to Andrew Dittmar, the principal analyst at EIR, the significant factors hindering M&A activity include heightened volatility in both commodity and equity markets. This variability has thrown a major obstacle in the path of deal-making, already complicated by a dearth of attractive opportunities for publicly listed exploration and production (EP) companies, particularly in the Permian Basin, which has historically been a hotbed for mergers and acquisitions. Dittmar remarked, "The engine of M&A over the last few years has sputtered and stalled."

In a stark contrast to public firms, private capital continues to demonstrate resilience, showcasing more flexibility in pursuing various deals and assets without the necessity for significant scale. Some private investors are re-entering the Permian Basin, acquiring smaller assets or looking into extensional areas that have yet to be consolidated by larger players. The emergence of interest in regions like the SCOOP and STACK formations in Oklahoma exemplifies opportunities where public companies may assume a seller role rather than a purchaser.

Rising International Interest

Additionally, companies based in Asia, specifically those with commitments to importing liquefied natural gas (LNG), are surfacing as a potential force in acquiring gas assets located within the Gulf Coast area. The marriage of rising international demand for gas linked to Gulf Coast LNG and the burgeoning data center requirements in Appalachia could potentially rejuvenate M&A activities relating to natural gas in the coming months.

Interestingly, what has been remarkably absent this year is the consolidation of public companies — a vital segment of the M&A market during 2023 and 2024. Dittmar notes that such dealings could potentially see increased negotiations during volatile market conditions since they are typically stock-for-stock exchanges that mitigate commodity price risk, leading to better terms for all parties involved.

Outlook for the Second Half

Looking ahead to the latter half of 2025, some analysts speculate that the combination of private capital and international interest might aid in gaining traction for upcoming deals, particularly as market conditions stabilize. The report hints that while public operators face significant challenges, private equity's appetite for smaller-scale acquisitions could provide a much-needed boost in M&A activities moving forward. In conclusion, while the current state of upstream M&A may cast a shadow of uncertainty, potential pathways for recovery are being explored, especially among private investors willing to pivot and adapt to the current landscape.

About Enverus Intelligence Research

Enverus Intelligence Research (EIR) is a leading provider of energy-centric research, focusing on the oil, natural gas, power, and renewable sectors. EIR generates reports that include asset valuations, resource assessments, technical evaluations, and macro-economic forecasts, providing advanced insights for stakeholders across the energy industry. For further details, visit Enverus.com.