Global upstream merger and acquisition (M&A) activity saw a significant decline in the first half of 2025, reaching just over $80 billion—a 34% drop compared to the same period in 2024, according to Rystad Energy.
“The slowdown is due mainly to volatile oil prices, tariff uncertainties, higher OPEC+ production and fewer oil-focused deals in the US shale industry,” Atul Raina, vice president, upstream M&A research at Rystad, said in a release.
This downturn began sharply in early 2025, with global deal value plummeting 39% from $28 billion in Q4 2024 to $28 billion in Q1 2025, data showed.
This Q1 figure was less than half of the $66 billion recorded in Q1 2024.
Global activities
While M&A activity increased in Africa, Asia, and the Middle East, it was insufficient to offset the dominant market share of North America, which accounted for 71% of the deal value in Q1 2025, the Norway-based energy intelligence company said.
Global deal-making saw a rebound in Oceania, South America, and Europe during Q2 and first half of 2025.
However, this recovery could not counteract the steep drop in US shale oil transactions. As a result, North America’s contribution to global deal value fell to approximately 51% in the first half of the year.
Rystad Energy anticipates a continued decline in global upstream M&A activity, with the exception of US-based shale gas plays. This is attributed to macroeconomic headwinds that introduce volatility and uncertainty into commodity prices.
“The global pipeline of potential energy deals started 2025 strong at $150 billion, with $28 billion closed in the first quarter. But by July, the pipeline shrank to $119 billion and total deals announced in the first half reached about $80 billion,” Raina said.
However, gas deals, especially in US shale and Canada’s Montney region, are holding up well. Outside North America, deal activity is expected to pick up in South America, Africa and Europe.
Permian Basin sees lack of deals
North America’s Permian Basin, long a hub for dealmaking, is seeing a scarcity of opportunities.
Asset valuations for development potential are sharply increasing, and M&A activity is moving beyond West Texas.
This trend is evident when examining the number of deals per region rather than their monetary value.
As the Permian market cools, exploration and production companies are looking elsewhere.
Examples include Diversified Energy’s nearly $1.3 billion acquisition of Maverick Natural Resources and Citadel’s $1.2 billion purchase of Paloma Natural Gas.
Additionally, EOG Resources acquired Utica-focused Encino Energy in May 2025.
“Although a strong and profitable pipeline of upstream opportunities remains untapped in North America, US shale consolidation has likely run its course,” Raina said.
Oil price volatility is creating uncertainty that makes it difficult for supermajors, independents and private equity-back operators, to capitalize on what would otherwise be an attractive market.
Gas outlook
The outlook for natural gas is considerably stronger, leading to a significant resurgence in US shale gas dealmaking during early 2025.
In the first quarter, deal values jumped by 30%, with gas constituting 62% of traded resources—one of the highest quarterly shares for gas since 2022, Rystad Energy data showed.
This strong trend continued into the second quarter, as gas accounted for approximately 82% of all traded resources, marking the highest level observed since 2019.
Major companies are optimizing portfolios and managing risk more effectively by adjusting their strategies due to the increasing favorability of natural gas.
To streamline resources and free up capital, Chevron divested its operated stake in East Texas gas assets to TG Natural Resources. Meanwhile, Equinor acquired non-operated stakes in EQT’s Marcellus assets, allowing them exposure to robust gas production without full operational responsibilities or risks.
“These moves reflect a broader trend of companies focusing on core expertise or pursuing more capital-efficient participation in the recovering gas market,” Rystad said.
International M&A
International M&A activity experienced a significant decline of 59% quarter-over-quarter in Q1 2025, reaching $8.3 billion, primarily due to a slowdown in dealmaking across Europe, Oceania, and South America, data from Rystad showed.
However, a recovery in Africa, Asia, and the Middle East mitigated this decline.
Despite the initial drop, international deal value for the first half of 2025 surged to $39.5 billion, marking a 37% year-on-year increase, largely attributed to a robust rebound in the second quarter.
Key transactions included ADNOC subsidiary XRG’s bid for Santos (nearly half of total international deal value); Repsol and Nego Energy’s UK North Sea upstream merger forming Neo Next Energy among others.
A potential Shell-BP merger remains a significant unknown, with the capacity to single-handedly propel annual deal value beyond $200 billion for the third consecutive year, the agency said.
Looking ahead, Southeast Asia is poised to become a significant hub for mergers and acquisitions, driven by renewed interest in deepwater gas projects in Indonesia and Malaysia, which is expected to fuel regional deal activity, Rystad said.
Examples include the planned joint venture between Eni and Petronas, and Indonesia’s Pertamina reportedly considering an investment in the North Ganal project.
In contrast, the global M&A market is anticipated to experience a slowdown for the remainder of the year, unless unforeseen circumstances alter the current trend, the agency added.
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