Oil and gas players are finally inking new mergers and acquisitions, after nearly two years of moribund deal activity.
Deal-making hit a soft spot following the 2014 oil bust as banks tightened lending to distressed drillers and buyers and sellers remained at odds over the value of energy assets. Now, climbing crude prices, easing capital markets, and a gold rush in Texas’s prolific Permian basin are thawing a prolonged M&A freeze.
Through the first two weeks of November, upstream oil and gas deal-making hit $56.7 billion, compared with $26.8 billion seen in the same period last year.
A few deals in the midstream pipeline and storage sector and downstream refining and marketing space have made headlines recently, but the real recovery is being led by the upstream exploration and production sector — the part of the industry responsible for finding and extracting oil and gas.
In the third quarter, the total value for upstream transactions worth at least $10 million reached $20.2 billion dollars, according to data from PLS Inc., a Houston-based oil and gas research firm. That is more than double the level from a year ago and approaches levels not seen since the beginning of the oil price downturn.