What's Happening?
Energy Advisors released its third-quarter A&D Special Report, indicating a rise in deal flow but a decrease in overall deal value within the oil and gas sector. The report notes that publicly reported transactions over $10 million increased to 22 deals, up from 16 in the previous quarter. However, the combined value of these deals fell by 30% to $9.6 billion, compared to $13.6 billion in the second quarter of 2025. Public companies continue to dominate the buying side, accounting for more than three-quarters of total activity. Private equity selling has cooled significantly, dropping from $30 billion in the previous year to less than $2 billion this quarter. The report also highlights ongoing mergers and acquisitions, with Crescent Energy and California Resources making significant moves in the market.
Why It's Important?
The report underscores a shift in the oil and gas industry, where public companies are increasingly taking the lead in acquisitions, while private equity selling has slowed. This trend could indicate a more stable market environment, with public entities seeking predictable cash flows and inflation protection. The decrease in deal value, despite increased deal flow, suggests a focus on smaller, strategic acquisitions rather than large-scale mergers. This could impact the industry's overall growth and consolidation strategies, affecting stakeholders such as investors, energy companies, and policymakers. The continued interest in mergers and acquisitions highlights the industry's focus on operational efficiencies and disciplined capital allocation.
What's Next?
Looking ahead, Energy Advisors anticipates a healthy deal flow in the fourth quarter, driven by strong natural gas fundamentals and a robust appetite for PDP, minerals, and power-linked assets. Veteran private equity teams are actively seeking new opportunities, which could lead to more diverse deal geographies. The market is expected to remain focused on inventory quality, cash flow, and operational efficiencies. Additionally, Crescent Energy is reportedly nearing the sale of its Wyoming EOR assets, and Civitas and SM Energy are in talks for a potential merger. These developments could further shape the industry's landscape in the coming months.
Beyond the Headlines
The report highlights a broader trend of resilience and evolution in the U.S. A&D markets, emphasizing the importance of 'content, context, and contrast' in deal-making. This suggests a shift towards more strategic and thoughtful acquisitions, which could lead to long-term stability and growth in the sector. The focus on conventional and PDP assets, as well as the involvement of diverse buyer profiles, indicates a move towards sustainable and predictable investment strategies.
