Mergers and acquisitions in the U.S. oil and gas industry tripled last year, even as commodity prices softened. A new report released Tuesday shows that energy companies increased spending to boost efficiency and long-term profits.
Why It Matters
The surge in dealmaking marks a clear shift in strategy. After years of prioritizing shareholder returns, companies are now focusing on growth through consolidation. This change comes as oil and gas prices retreated from their 2022 highs.
Industry Context
The wave of consolidation has been driven by several megadeals. Key players include Exxon Mobil (NYSE: XOM), Diamondback Energy (NASDAQ: FANG), and ConocoPhillips (NYSE: COP).
Expert Insight
“Companies with strong cash reserves are targeting efficiency through scale,” said Bruce On, partner at EY’s strategy and energy transactions group. “It’s a relook at processes, tools, workforce, and overall operations.”
By the Numbers
- Total M&A spending reached $206.6 billion in 2024, up sharply from $47.9 billion in 2023, according to Ernst & Young.
- Dividend and share buyback payments fell 25% to $29.2 billion.
- Exploration and development spending slipped 7% to $85.5 billion.
- Profits dropped 10% to $74.8 billion, far below the 2022 record.
Exxon Mobil Leads the Way
Exxon Mobil was the largest buyer, spending $84.5 billion on acquisitions. Its biggest deal was the $60 billion purchase of U.S. shale oil producer Pioneer Natural Resources (NYSE: PXD), completed in May 2024.
