Merger and acquisition activity in the upstream oil and gas sector was hot in 2023, with spending by exploration and production companies reaching levels not seen in more than a decade, according to the U.S. Energy Information Administration.

M&A spending by the companies rose to $234 billion during the year, with inflation adjustments making it the highest level since 2012, EIA said Tuesday.

M&A activity had declined significantly in the wake of the Covid-19 pandemic, with last year's spending more than double that seen in 2020 and 2022, EIA data show.

The surge in M&A spending was fueled largely by two in-progress mega-deals:

ExxonMobil's $64.5 billion acquisition of Pioneer Natural Resources and Chevron's $60 billion purchase of Hess Corp. Both are the largest deals in the sector since Occidental Petroleum's $55 billion purchase of Anadarko Petroleum in 2019, the agency said.

The increase in acquisitions, along with the impact of the early pandemic crash in energy prices on smaller players, has led to consolidation in the upstream sector. That consolidation was seen as one reason behind the slow ramp up in oil and gas output as prices rose during the pandemic recovery and in the aftermath of Russia's 2022 invasion of Ukraine.

In its look at the M&A environment, EIA noted that Chevron currently accounts for 5% of U.S. production of crude oil and natural gas liquids, making it the country's largest producer. Once the Hess acquisition is complete, Chevron's share of U.S. production will rise to 6%, based on data from the third quarter of last year, EIA said.

ExxonMobil, currently the fourth-largest producer in the country, could see its share of production rise to nearly 7% with the Pioneer purchase, according to the agency.

EIA said the sector has seen a number of other notable deals recently. These include:

--Diamondback Energy's $26 billion merger with Endeavor Energy, which could make the company the third-largest oil and natural gas producer in the Permian Basin, behind ExxonMobil and Chevron.

--Occidental Petroleum's $12 billion purchase of CrownRock, which produced about 1.2 million bbl of oil equivalent per day in the third quarter of last year.

--Chesapeake Energy's $11.5 billion merger with Southwestern Energy, with the combined company likely to become the largest natural gas producer in the U.S.

--Chevron's $7.6 billion purchase of PDC Energy in August.

--ExxonMobil's $4.9 billion purchase of Denbury in November, which aids Exxon's carbon capture and storage plans.

--APA Corp.'s pending $4.5 billion acquisition of Callon Petroleum.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com


(END) Dow Jones Newswires

03-19-24 1211ET