U.S. Upstream Oil & Gas Dealmaking Falls Again Amid Low Oil Prices

Core Insights - Mergers and acquisitions in the U.S. upstream oil and gas sector have declined for the third consecutive quarter, with deal values dropping to $9.7 billion in Q3, a 28% decrease from Q2, and significantly below the record $192 billion in 2023 [1] - The average U.S. crude futures price during Q3 was approximately $65 per barrel, which is $10 lower than the same period last year, impacting the feasibility of M&A transactions [1][2] - The slowdown in U.S. dealmaking is partly due to a lack of opportunities in the Permian Basin, which has historically been a hotspot for M&A activity [3] Company Activities - EOG Resources acquired Encino Energy for $5.6 billion, focusing on the Utica Shale, while Diversified Energy purchased Maverick Natural Resources for nearly $1.3 billion, and Citadel acquired Paloma Natural Gas for $1.2 billion, which operates primarily in the Haynesville Shale region [4] Comparative Analysis - In contrast to the U.S. market, Canada has seen a robust M&A environment, with nearly $12 billion in upstream deal value in the first half of the year, matching the average annual deal value over the past five years [5] - Notable Canadian transactions include Whitecap Resources' acquisition of Veren for $15 billion and CNRL's purchase of Shell's stake in the Athabasca Oil Sands Project, highlighting the lower breakeven points in Canadian oil sands compared to U.S. shale assets [5]