U.S. Oil & Gas Industry Faces M&A Surge in 2024, Slows in 2025

In 2024, the U.S. oil and gas industry experienced an unprecedented surge in mergers and acquisitions (M&A), with total deal values reaching $206.6 billion—a substantial increase from $47.9 billion in 2023. This wave of consolidation was driven by major transactions, including ExxonMobil's $60 billion acquisition of Pioneer Natural Resources, Diamondback Energy's $26 billion merger with Endeavor Energy Resources, and ConocoPhillips' $22.5 billion acquisition of Marathon Oil. However, the momentum slowed in the first half of 2025, with deal values declining by nearly 60% compared to the same period in 2024, attributed to factors such as oil price volatility and macroeconomic uncertainties.

The significant increase in M&A activity in 2024 was driven by companies seeking to enhance operational efficiency and scale amid fluctuating commodity prices. Notable transactions included ExxonMobil's $60 billion acquisition of Pioneer Natural Resources, Diamondback Energy's $26 billion merger with Endeavor Energy Resources, and ConocoPhillips' $22.5 billion acquisition of Marathon Oil.

In May 2024, ExxonMobil completed its $60 billion acquisition of Pioneer Natural Resources, more than doubling its Permian footprint and positioning itself as the largest producer of shale gas in the region. This merger combined Pioneer's 850,000 net acres in the Midland Basin with ExxonMobil's 570,000 net acres in the Delaware and Midland Basins, creating an industry-leading, high-quality, high-return undeveloped U.S. unconventional inventory position. ExxonMobil's Permian production volume was expected to more than double to 1.3 million barrels of oil equivalent per day, based on 2023 volumes, and increase to approximately 2 million barrels of oil equivalent per day in 2027. ExxonMobil Chairman and CEO Darren Woods stated, "This premier, tier-one asset is a natural fit for our Permian portfolio and gives us a greater opportunity to deploy our technology and deliver operating and capital efficiency for long-term shareholder value."

Diamondback Energy's $26 billion acquisition of Endeavor Energy Resources created the largest pure-play oil producer in the Permian Basin, making it the third-largest producer in the area, trailing only ExxonMobil and Chevron. This strategic move aimed to enhance operational efficiency and scale amid fluctuating commodity prices.

ConocoPhillips agreed to acquire Marathon Oil in an all-stock deal valued at $22.5 billion, including $5.4 billion of Marathon's debt. This merger aimed to enhance reserves and increase efficiency, with anticipated cost savings of $500 million within the first year.

Several factors contributed to the heightened M&A activity in 2024. Companies sought to enhance operational efficiency and scale amid fluctuating commodity prices. Firms reallocated capital from shareholder distributions to strategic acquisitions, with shareholder distributions declining by 25% to $29.2 billion, while exploration and development spending decreased by 7% to $85.5 billion. The consolidation trend reduced the number of publicly traded exploration and production companies from 50 to 40, with these entities accounting for approximately 41% of U.S. oil and gas production in 2024.

The momentum of M&A activity slowed in the first half of 2025, with deal values declining by nearly 60% compared to the same period in 2024. This downturn can be attributed to several factors. A 14% decline in oil prices since the start of 2025 created a standoff between sellers, reluctant to accept lower valuations, and buyers, wary of overpaying. Geopolitical tensions, including new U.S. trade tariffs and OPEC's plans to ease output cuts, contributed to market volatility and investor hesitancy. The pool of high-quality acquisition targets, particularly in the Permian Basin, has shrunk, leading companies to explore opportunities in alternative regions such as the Utica Shale and Haynesville Shale.

The consolidation within the U.S. oil and gas industry has several implications. Mergers often lead to workforce reductions due to overlapping roles, impacting employment levels in the sector. The reduction in the number of major players may lead to decreased competition, potentially affecting pricing and innovation. Larger, more efficient companies may enhance energy production stability, contributing to national energy security.

The U.S. oil and gas industry's M&A landscape experienced a dramatic shift from a record-breaking surge in 2024 to a significant slowdown in 2025. Understanding the factors behind this fluctuation provides valuable insights into the sector's evolving dynamics and future outlook.