Permian Basin Demand Fuels U.S. Upstream M&A Despite Q2 Decline

U.S. upstream mergers and acquisitions (M&A) saw a sharp decline in the second quarter, with total deals reaching $9.1 billion, down 76% from Q1 and 33% from the same period last year. According to Enverus Intelligence Research, this marks one of the weakest quarterly totals since 2020.

The Bureau of Land Management's record-setting New Mexico lease sale generated over $4 billion in revenue, accounting for more than 40% of the quarter's total M&A value. Despite the slowdown, Enverus notes that competition for premium Permian basin inventory remained strong.

Public operators dominated the buying activity during Q2, with record bids placed on Permian acreage and notable acquisitions including Matador Resources' $1.3 billion purchase of Paloma Permian and Magnolia Oil & Gas' acquisition of WildFire Energy in the Eagle Ford. Private buyers backed by asset-backed securitization (ABS) financing also continued to expand their presence, accounting for nearly 30% of deal activity.

Enverus expects recent transactions to encourage more private operators to market assets and support continued demand from public companies. The firm predicts that upstream M&A activity will strengthen during the second half of this year as higher oil prices improve free cash flow for buyers and attract additional private companies to the market.