Deal making among U.S. oil and gas producers remained at a sometimes unrelenting pace this past year with over $83.5 billion worth of notable transactions announced or completed. 

Overall, 2018 was the Year of Consolidation as several E&Ps agreed to merge throughout the U.S. Outside the monster $10.8 billion divestiture of BHP Billiton Ltd.’s (NYSE: BHP) U.S. shale assets, the U.S. upstream industry saw 21 M&A transactions worth roughly $45 billion in 2018.

The Permian Basin might have taken home the gold—Concho Resources Inc.’s (NYSE: CXO) $9.5 billion purchase of RSP Permian—and silver—Diamondback Energy Inc.’s (NASDAQ: FANG) $9.2 billion rollup of Energen—medals for the two largest M&A deals of 2018, but, this year, deal making was consistently more widespread.

A wave of transactions worth roughly $4.2 billion even reached the oft-overlooked Gulf of Mexico (GoM) in 2018. Minerals A&D activity also struck a fever pitch this past summer with a duo of minerals mergers totaling more than $1.2 billion announced in the span of one week.

However, by early November, deal making hit a whole new altitude with a massive deals week of three corporate oil and gas transactions worth $13.4 billion.

Analysts at Tudor, Pickering, Holt & Co. (TPH) called the week “merger mania” and just the “tip of the M&A iceberg that will emerge in 2019.”

2018 M&A Activity

Quarter Announced

Buyer

Seller

Value ($MM)

Asset Location

Month Closed

1Q 2018

Concho Resources

RSP Permian

$9,500

Permian Basin

July

3Q 2018

Diamondback Energy

Energen

$9,200

Permian Basin

November

4Q 2018

Encana

Newfield Exploration

$7,700

Multibasin (Scoop/Stack)

Pending

4Q 2018

Chesapeake Energy

WildHorse Resource Development

$3,977

Eagle Ford

Pending

4Q 2017

Talos Energy

Stone Energy

$1,900

US Gulf of Mexico

May

4Q 2018

Denbury Resources

Penn Virginia

$1,700

Eagle Ford

Pending

4Q 2018

Cimarex Energy

Resolute Energy

$1,600

Permian Basin

Pending

3Q 2017

Alta Mesa Resources (f/k/a Silver Run Acquisition)

Alta Mesa Holdings; Kingfisher Midstream

$1,400

Anadarko Basin (Scoop/Stack)

February

3Q 2018

Diamondback Energy

Ajax Resources

$1,245

Permian Basin

October

3Q 2018

Kosmos Energy

Deep Gulf Energy

$1,225

US Gulf of Mexico

September

4Q 2017

Oasis Petroleum

Forge Energy

$946

Permian Basin (Delaware)

February

2Q 2018

Falcon Minerals

Royal Resources Partners

$800

Eagle Ford

August

4Q 2017

HighPoint Resources (f/k/a Bill Barrett)

Fifth Creek Energy

$649

D-J Basin

March

1Q 2018

Admiral Permian Resources

Three Rivers Operating III

$640

Permian Basin (Delaware)

April

3Q 2018

PennEnergy Resources

Rex Energy

$600.5

Appalachia

September

2Q 2018

Kimbell Royalty Partners

Haymaker Minerals & Royalties

$404

Multibasin

July

2Q 2018

Triple Crown Resources

Broad Oak Energy II

$400

Permian Basin

April

3Q 2018

Eclipse Resources

Blue Ridge Mountain

$345

Appalachia

Pending

2Q 2018

Cox Oil Offshore

Energy XXI Gulf Coast

$322

US Gulf of Mexico

October

4Q 2017

Eclipse Resources

Travis Peak Resources

$92.2

Appalachia (Utica)

January

3Q 2018

Talos Energy

Whistler Energy II

$52

US Gulf of Mexico

September

2Q 2018

Venado Oil & Gas

Texas American Resources

N/A

Eagle Ford

July

Source: Hart Energy

“Buckle up as the upstream merger train has left the station and next year will likely be a wild ride,” TPH analysts said in a Nov. 1 research note following Encana Corp.’s (NYSE: ECA) announcement that it would merge with Newfield Exploration Co. (NYSE: NFX).

“We can easily think of more than 10 additional deals where there should be a strategic asset rationale or cost synergies that would make sense heading into 2019,” the TPH analysts continued. “These names would represent over $38 billion in market cap and $1.2 billion in G&A [savings] alone.”

M&A activity in the GoM is also expected to pick up going into 2019 as a lengthy list of assets for sale continues to grow, according to a recent report by energy consultancy group Wood Mackenzie (WoodMac).

Despite a healthy number of positions in the GoM already sold in 2018, WoodMac expects more assets will be added to the for-sale list. Private-equity players are likely to want to sell as their assets in the GoM get closer to maturation, while established players may continue to shed noncore positions.

“There appears to be plenty for sale in deepwater Gulf of Mexico,” said William Turner, senior research analyst at WoodMac. “We believe the quality of the assets is high. If oil prices co-operate, we could see a thriving M&A market in 2019.”

Still, 2018 deal making was not without its casualties: Earthstone Energy Inc.’s (NYSE: ESTE) $950 million acquisition of Midland Basin private operator Sabalo Energy LLC was recently terminated.

In a statement regarding the termination, Earthstone CEO Frank A. Lodzinski commented, “Despite the high quality of the Sabalo assets and the outstanding opportunity the transaction provided Earthstone, the drastic change in commodity prices and in the debt and equity markets has negatively affected the significant merits of the acquisition. Accordingly, we have mutually agreed to terminate the contribution agreement.”

Further, it remains to be seen if other transactions fall victim to the market’s cold shoulder as about $15.3 billion worth of the mergers in 2018 have yet to close.

Notable A&D Deals From 2018

Quarter Announced

Buyer

Seller

Value ($MM)

Asset Location

Month Closed

3Q 2018

BP

BHP Billiton

$10,500

Multibasin
(Eagle Ford, Permian/Delaware, Haynesville)

October

1Q 2018

Magnolia Oil & Gas (f/k/a TPG Pace Energy)

EnerVest

$2,660

Eagle Ford

July

3Q 2018

Flywheel Energy

Southwestern Energy

$2,303

Fayetteville

December

3Q 2018

Encino Acquisition Partners

Chesapeake Energy

$2,000

Appalachia (Utica)

October

4Q 2018

Vantage Energy

QEP Resources

$1,725

Williston Basin (Bakken)

Pending

2Q 2018

Diversified Gas & Oil

EQT

$775

Appalachia

July

4Q 2017

Venado Oil & Gas

Cabot Oil & Gas

$765

Eagle Ford

February

4Q 2018

Aethon Energy

QEP Resources

$735

Haynesville

Pending

1Q 2018

Fieldwood Energy

Noble Energy

$710

US Gulf of Mexico

April

1Q 2018

Enduring Resources

WPX Energy

$700

San Juan Basin

March

2Q 2018

Comstock Resources

Akoma Drilling; Williston Drilling

$620

Williston Basin

August

2Q 2018

Callon Petroleum

Cimarex Energy

$570

Permian Basin (Delaware)

September

1Q 2018

Fleur de Lis Energy

Devon Energy

$553

Barnett

May

2Q 2018

California Resources

Chevron

$513.3

San Joaquin Basin

April

1Q 2018

BCE-Mach; Camino Natural Resources

Chesapeake Energy

$500

Anadarko Basin (Mississippi Lime)

June

1Q 2018

Northwoods Energy

SM Energy

$500

Powder River Basin

March

4Q 2018

DJR Energy

Encana

$480

San Juan Basin

December

2Q 2018

Ascent Resources

Utica Minerals Development

$477

Appalachia (Utica)

July

1Q 2018

SK Innovation

Longfellow Nemaha

$453

Anadarko Basin (Stack)

June

2Q 2018

Ascent Resources

CNX Resources

$400

Appalachia (Utica)

August

2Q 2018

Ascent Resources

Hess

$400

Appalachia (Utica)

August

1Q 2018

ConocoPhillips

Anadarko Petroleum

$400

Alaska North Slope

June

4Q 2017

Oil Search

Armstrong Oil & Gas; GMT Exploration

$400

Alaska North Slope

February

3Q 2018

Matador Resources

U.S. BLM

$387

Permian Basin (Delaware)

September

2Q 2018

Total; Equinor

Cobalt International Energy

$339

US Gulf of Mexico

April

4Q 2018

Diamondback Energy

ExL Petroleum; EnergyQuest II

$312.5

Permian Basin (Midland)

October

3Q 2018

Merit Energy

BHP Billiton

$300

Fayetteville

October

4Q 2018

Undisclosed

Range Resources

$300

Appalachia

October

2Q 2018

Whiting Petroleum; Riverside Energy

Oasis Petroleum

$283

Williston Basin

Pending

1Q 2018

Colgate Operating; Luxe Energy

Concho Resources

$280

Permian Basin (Delaware)

February

2Q 2018

Undisclosed

ConocoPhillips

$250

Multibasin
(Permian Basin, S TX)

April

4Q 2017

EP Energy

Carrizo Oil & Gas

$245

Eagle Ford

January

2Q 2018

ConocoPhillips

Undisclosed

$235

Austin Chalk

February

2Q 2018

Stone Energy

Anadarko Petroleum; Exxon Mobil; Royal Dutch Shell

$234

US Gulf of Mexico

May

3Q 2018

Lime Rock Resources

ConocoPhillips

$230

Barnett

Pending

2Q 2018

Ascent Resources

Salt Fork Resources

$223

Appalachia (Utica)

Pending

1Q 2018

Sundance Energy Australia

Pioneer Natural Resources; Reliance Industries

$221.5

Eagle Ford

April

1Q 2018

Tanos Energy Holdings III

WildHorse Resource Development

$217

Louisiana

March

3Q 2018

Carrizo Oil & Gas

Devon Energy

$215

Permian Basin (Delaware)

October

1Q 2018

Liberty Mutual Investments

ExL Petroleum Management

$207

Permian Basin

January

3Q 2018

Undisclosed

Pioneer Natural Resources

$201

Raton Basin

August

1Q 2018

Halcón Resources

Royal Dutch Shell

$200

Permian Basin (Delaware)

April

3Q 2018

Magnolia Oil & Gas

Harvest Oil & Gas

$191

Eagle Ford

August

2Q 2018

Vitesse Energy

Undisclosed

$190

Williston Basin (Bakken)

April

1Q 2018

Scout Energy Partners

Linn Energy

$119.5

Permian Basin

March

4Q 2018

Vermilion Energy

Massif Oil & Gas

$186

Powder River Basin

September

4Q 2018

Diversified Gas & Oil

Core Appalachia Holding

$183

Appalachia

October

4Q 2018

Undisclosed

Parsley Energy

$170

Permian Basin (Midland)

November

2Q 2018

Petro-Hunt

SM Energy

$160.9

Williston Basin (Bakken)

May

3Q 2018

Middle Fork Energy Partners

QEP Resources

$155

Uinta Basin

September

3Q 2018

Northern Oil and Gas

Pivotal Petroleum II

$151.8

Williston Basin (Bakken/Three Forks)

September

2Q 2018

Osaka Gas

Sabine Oil & Gas

$144.53

Cotton Valley/Haynesville

Pending

1Q 2018

Undisclosed

Centennial Resource Development

$141

Permian Basin (Delaware)

March

4Q 2017

Verdad Oil & Gas

Carrizo Oil & Gas

$140

D-J Basin

January

2Q 2018

Matador Resources

Jetstream Oil and Gas

$132.8

Permian Basin (Delaware)

Pending

1Q 2018

Silverpeak Altamont Energy

Linn Energy

$132

Utah (Altamont Bluebell Field)

April

4Q 2018

Undisclosed

Pioneer Natural Resources

$132

Sinor Nest (Lower Wilcox)

Pending

2Q 2018

Undisclosed

SM Energy

$131.4

Permian Basin

May

3Q 2018

Whiting Petroleum

Undisclosed

$130

Williston Basin (Bakken/Three Forks)

July

2Q 2018

USG Energy Producer Holdings

Comstock Resources

$125

Eagle Ford

April

4Q 2017

Scout Energy Partners

Linn Energy

$122

Midcontinent

March

3Q 2018

Undisclosed

Bonanza Creek Energy

$117

Cotton Valley

August

4Q 2018

Kimbell Royalty Partners

Undisclosed

$107.8

Multibasin

December

1Q 2018

Revolution Resources

Gastar Exploration

$107.5

Midcontinent

February

4Q 2017

Halcón Resources

BTA Oil Producers

$104

Permian Basin (Delaware)

February

4Q 2018

SRC Energy

Undisclosed

$96.8

D-J Basin

September

1Q 2018

Centennial Resource Development

OneEnergy Partners

$95

Permian Basin (Delaware)

February

1Q 2018

Diversified Gas & Oil

Alliance Petroleum

$95

Appalachia

March

1Q 2018

ConocoPhillips

Amelia Resources

$87

Austin Chalk

January

1Q 2018

Penn Virginia

Hunt Oil

$86

Eagle Ford

March

1Q 2018

Diversified Gas & Oil

CNX Resources

$85

Appalachia

March

2Q 2018

Energy Resources 12

Bruin E&P Partners

$82.5

Williston Basin

July

2Q 2018

Evergreen Natural Resources

Pioneer Natural Resources

$79

Raton Basin

July

3Q 2018

Equinor

Texegy

$75

Austin Chalk

September

3Q 2018

Undisclosed

Ultra Petroleum

$75

Uinta Basin

October

1Q 2018

Undisclosed

Extraction Oil & Gas

$72

D-J Basin

April

4Q 2018

Undisclosed

Riviera Resources

$68

Arkoma Basin

Pending

1Q 2018

Lilis Energy

OneEnergy Partners Operating

$65

Permian Basin (Delaware)

March

2Q 2018

Undisclosed

EQT

$64

Permian Basin

June

4Q 2017

Chaparral Energy

Undisclosed

$60

Anadarko Basin (Stack)

March

2Q 2018

Carbon Natural Gas

Old Ironsides Energy

$57

Appalachia

Pending

1Q 2018

Undisclosed

Parsley Energy

$57

Permian Basin

January

3Q 2018

Undisclosed

W&T Offshore

$56.8

Permian Basin

October

3Q 2018

PetroShale

Undisclosed

$55

Williston Basin (Bakken)

August

2Q 2018

Presidio Petroleum

Midstates Petroleum

$58

Anadarko Basin

June

1Q 2018

Undisclosed

Blue Ridge Mountain Resources

$56

Appalachia

April

4Q 2018

Undisclosed

Devon Energy

$50

Barnett

November

Source: Hart Energy

Emily Patsy can be reached at epatsy@hartenergy.com.