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Q4 2020 saw jump in oil & gas dealmaking

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Oil and gas producers engaged in the most dealmaking of the year in the fourth quarter of 2020, according to analytics firm Enverus, Reuters reports.

Deals worth $27.1 billion were had by oil and gas producers in the fourth quarter—a $ billion increase from the prior quarter.

Bolstering the figures were three multi-billion-dollar acquisitions in the Permian basin, including Conoco’s substantial acquisition of Concho Resources for $13 billion, Pioneer Natural Resources acquisition of Parsley Energy for nearly $8 billion, and Diamondback’s acquisition of QEP Resources and Guidon Operating for $3 billion.

According to Enverus, the actual number of deals across all of 2020 was small, at just 140—the fewest since 2006. It was expected to be a weak M&A year across all sectors. It was. But it was made even weaker given the coronavirus. The deals that were had were more out of necessity in an effort to survive the lower price environment.

For 2021, Enverus sees a wave of consolidations in the oil and gas sector on the horizon, as companies emerging from Chapter 11 now fit and trim and more upstanding merger partners.

Canada’s oil and gas merger scene is also heating up with Whitecap Resources leading the way as it moves to acquire two companies—NAL Resources in 2020 and TORC Oil & Gas in 2021.

Other Canadian oil and gas mergers of 2020 include Cenovus Energy and Huskey Energy’s merger, and the merger between Obsidian Energy and Bonterra Energy Corp in August.

2021 should see U.S. oil and gas companies continue to ditch non-core assets and streamline and belt tighten, and perhaps continue down the path of sustainability in preparation for the incoming administration, which is seen as more climate-friendly.

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