Oil M&A Is Hot. Permian Resources and Other Possible Targets.

The announcement comes after deals by
Exxon Mobil
to buy
Pioneer Natural Resources,

Chevron
to buy
Hess,
and
Occidental Petroleum
to buy private company CrownRock last year.

In the fourth quarter of 2023, a record $144 billion worth of deals were signed for energy producers, according to Enverus.

The M&A trend has remained “scorching” in 2024, writes Enverus analyst Andrew Dittmar. Already more than $40 billion worth of deals have been signed.

In January,
Chesapeake Energy
agreed to buy
Southwestern Energy,
creating a natural gas behemoth that should benefit from increasing gas exports from the United States. 

Dittmar thinks that subsequent deals in the Permian Basin may be smaller, given there aren’t many big targets left. But some analysts think other companies could get into the action in the months ahead, and dealmaking could spread to other oil and gas basins.

Companies may be encouraged to do so by the market reaction to the Diamondback deal—the stock rose 9.4% on Monday. 

To be sure, some of the choicest assets have already been swiped up.

“I would say probably the most attractive ones have been bought,” said Roth MKM analyst Leo Mariani. “A lot of buyers are viewing this as potentially the last wave of consolidation. If you’re gonna grab some of these remaining shale assets, you’ve got to kind of get them now.” 

Some of the public companies that have attractive assets and could become targets include
Permian Resources,

Matador Resources,
and
HighPeak Energy,
according to Mariani.

Truist analyst Neal Dingmann has also pointed to
Permian Resources
— itself a frequent acquirer in recent years—as a possible target.

Mariani also thinks more natural gas producers could get the itch to merge following the Chesapeake deal. Among the possible targets are
Range Resources,

Antero Resources,
and
Comstock Resources.

Write to Avi Salzman at [email protected]