What’s been happening in upstream M&A?

Oil prices have been on a rollercoaster ride in 2025, dropping dramatically from a high of almost US$80 per barrel in mid-January to lows below US$60 before partially recovering. So, how has market volatility combined with other factors to affect corporate appetite for mergers and acquisitions?  

We recently released our H1 2025 review and outlook for M&A activity in the oil and gas sector. Fill out the form at the top of the page to download an extract from the full report, or read on for a brief overview. 

Fewer deals but significantly higher spend 

The 85 M&A deals announced in H1 2025 represent a 10% year-on-year fall in oil and gas M&A deal volumes. The number of deals has been declining progressively since 2022, making this the seventh consecutive half-year drop, with volumes now well below the ten-year average. However, at US$71 billion, the overall value of disclosed deals was higher than the half-year average for the last five years, and a huge 80% higher than the unusually low total for the previous half year. Corporate deal spend returned to make up a majority of the total, in strong contrast to H1 2024 when most spend came from asset deals. 

Corporate consolidation is a key driver 

The trend towards corporate consolidation continues to drive a high level of spending on M&A. Deal value totalled US$47 billion across only 14 corporate deals, with the highlight being an all-cash offer by a consortium to acquire Santos, Australia’s largest supplier of natural gas. The proposed deal, announced in June, is being led by a subsidiary of the Abu Dhabi National Oil Company (ADNOC). It values Santos at US$18.7 billion – considerably higher than its value based on share price at the time of the offer. Assuming the purchase goes ahead, the deal would take National Oil Company (NOC) spending to its highest level since 2012. 

A bumper period for gas deals 

H1 2025 was a particularly strong half year for gas-related M&A. Aside from the Santos deal, North American gas was especially sought after, boosted by growing bullishness regarding the outlook for domestic demand, as well as for liquefied natural gas (LNG) export opportunities. Major deals included EOG’s purchase of Encino Acquisition Partners for US$5.6 billion, and the sale of Olympus Energy and its assets in the gas-rich Marcellus region of the US to EQT in a cash-and-stock deal for US$1.8 billion. 

Average valuations stayed steady 

We use our proprietary Implied Long-Term Oil Price (ILTOP) metric to compare M&A valuations, calculating the oil price used in each transaction value based on our asset cashflow models and a 10% discount rate. At US$70 per barrel, our ILTOP average for H1 2025 stayed roughly in line with H2 2024 figures, having previously increased from US$65 per barrel in H1 2024. However, global valuations varied significantly. Long-life, high-margin assets continue to be the most highly prized, while LNG, tight oil and deepwater assets also commanded premiums.   

Long-term M&A drivers are bullish 

Companies in the oil and gas sector have learned to tighten their belts over the past ten years. However, the growing prospect of a delayed energy transition points to more resilient demand for oil and gas over the next decade. Portfolio longevity is a key issue for many firms, so despite capital discipline remaining a headwind, more M&A will almost inevitably be needed over the medium term. However, in the short term, price volatility creates uncertainty for businesses considering M&A. 

Remember to fill in the form at the top of the page to download the report extract, which includes a range of charts and data drawn from our proprietary M&A tool. You may also want to learn more about our M&A Service for subscribers.