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U.S. Oil and Gas Mergers and Acquisitions Face Slump Amid Low Crude Prices

The landscape of mergers and acquisitions (M&A) within the U.S. oil and gas sector has changed drastically, as outlined in a recent report by Enverus Intelligence® Research (EIR). The report highlights a significant downturn in deal-making activity, with the total value of transactions in the third quarter of 2025 plummeting to $9.7 billion. This marks the third consecutive quarterly decline and reflects the ongoing struggles faced by the industry amid stubbornly low crude prices.

As crude prices hover in the mid-$60s, buyers, particularly those involved in oil-weighted private equity-backed ventures, are largely sidelined. Andrew Dittmar, the Principal Analyst at EIR, suggests that these price levels have become a significant barrier for sellers, especially for those holding oil-weighted assets. Dittmar comments, "Most remaining shale M&A opportunities need stronger pricing to justify public companies paying for the undeveloped locations."

Despite these challenges, the quarter did not end without noteworthy transactions. Some smaller and mid-cap corporate mergers, as well as gas-weighted deals, offered slivers of hope in an otherwise bleak market environment. For instance, Crescent Energy's acquisition of Vital Energy, valued at over $3 billion in stock and assuming the associated debts, marked a significant event within this period. Additionally, Berry Petroleum's sale to California Resources Corporation for $717 million added to the list of notable transactions.

Dittmar notes the strategic move towards consolidation among small and mid-cap companies as a logical response to the decreasing quality and availability of high-value assets in the market. He adds, "Consolidation among SMID-cap companies is becoming the obvious strategic path forward in U.S. oil and gas M&A as high-quality inventory from private sellers becomes scarce and challenging for these companies to buy given their low trading multiples."

Turning attention to the natural gas sector, the third quarter showed a more promising outlook. Buyers retain a favorable perspective on natural gas due to the increasing international demand driven by liquefied natural gas (LNG) exports and a surge in data center power requirements. This optimism signifies a growing trend of expectation for increased prices in the natural gas market, with interest coming from various players, including international firms and private capital looking to tap into opportunities.

As we look towards the future, the prospects for upstream M&A may remain muted if low oil prices continue to deter private sellers. However, the ongoing consolidation among small and mid-cap companies and the flow of natural gas deals could present further opportunities within the U.S. oil and gas M&A landscape. Dittmar concludes with a note of cautious optimism, stating, "The market is adapting to lower oil, and we expect strategic consolidation and targeted acquisitions to keep M&A activity moving forward."

In summary, the U.S. oil and gas sector faces significant headwinds with the current M&A slowdown driven by low crude prices. Yet, pockets of activity, particularly in natural gas and SMID-cap consolidations, suggest a shifting landscape as the industry adapits to a complex market environment. The upcoming quarters could reveal whether this adaptability will lead to more robust M&A activities or continued stagnation.