Energy Insights: M&A – What’s Next?

Industries in Motion

In this episode, Greg Pardy (Head of Global Energy Research, Canadian Senior E&P & Integrated Oil Analyst), Scott Hanold (Managing Director, US E&P Analyst) and Biraj Borkhataria (Head of Global Energy Transition Research, Euro & US Integrated Oil Analyst) join Graeme Pearson (Co-Head of Global Research) to discuss themes in M&A and capital allocation amongst global energy producers.

M&A activity amongst energy producers is always a wildcard, but the recent tidal wave of consolidation activity unfolding in the United States is like a fever that has yet to run its course. Fortified balance sheets are the strongest we’ve seen in over a decade, with net debt at the end of 2023 about one-half that seen in 2020 during the pandemic, as energy producers globally have embraced a new model fusing financial resiliency with shareholder returns. This has also opened the door to intensified M&A activity via increased funding capacity.

US deals appear aimed at achieving quality scale, a lower cost of capital, overhead cost savings, and bolstering resource depth or enhancing portfolio diversification. The European majors could be buyers of US natural gas resources to rebalance LNG commitments. The next inflection point in this chapter could also involve M&A in Canada’s Montney play.