What's Happening?
The U.S. upstream mergers and acquisitions (M&A) market experienced a significant slowdown in the third quarter of 2025, with total transaction value reaching $9.7 billion. This marks the third consecutive
quarterly decline, driven by persistently low oil prices that have deterred potential buyers. According to Enverus Intelligence Research, the market's earlier momentum, largely fueled by private equity exits, has waned due to price pressures. Notable transactions during the quarter included Crescent Energy's acquisition of Vital Energy and Berry Petroleum's sale to California Resources Corporation. Despite the slowdown in oil-weighted deals, natural gas assets have shown resilience, supported by the growth in U.S. LNG exports and rising power demand from data centers.
Why It's Important?
The decline in M&A activity highlights the challenges faced by the oil and gas sector amid low crude prices. This trend could impact the financial health of companies reliant on asset sales for liquidity. The slowdown also suggests a shift in focus towards natural gas assets, which are gaining interest due to their long-term fundamentals. The consolidation among small- and mid-cap companies indicates a strategic adaptation to the current market conditions. This could lead to a more concentrated industry landscape, potentially affecting competition and innovation within the sector.
What's Next?
The near-term outlook for M&A activity remains subdued, with low crude prices discouraging private sellers. However, strategic consolidation among small- and mid-cap producers and continued interest in gas-weighted assets are expected to sustain moderate deal flow into early 2026. The market is likely to adapt to lower oil prices through selective acquisitions and strategic partnerships.
