While E&P dealmaking stalls amid tariffs and price swings, gas-fired assets and utilities are fueling a new M&A surge, PwC finds. (Source: Shutterstock.com)
LNG export growth and hype around AI is fueling M&A interest in natural gas-heavy U.S. basins.
After $260 billion in U.S. energy M&A over the past 18 months, the energy sector is looking beyond E&P consolidation, according to PwC’s 2025 midyear outlook report on U.S. deals.
The sector is “undergoing a strategic reset, with consolidation extending from upstream into midstream and oilfield services,” according to the report published June 18.
Deals in the Permian Basin and the Haynesville Shale “have increasingly included infrastructure carve-outs and bundled gathering assets, highlighting the growing emphasis on midstream efficiency,” PwC reported.
Gas, power momentum
Despite trade uncertainty from tariffs and commodity price volatility, natural gas continues to be a bright spot for U.S. E&Ps.
The Biden-era “pause” on LNG export permits was lifted as the new Trump administration took office in January. Lifting the pause cleared the way for new project approvals and “signaled renewed federal backing for LNG and natural gas infrastructure,” PwC said.
U.S. LNG exports are expected to almost double to around 30 Bcf/d by the end of this decade, Expand Energy CFO Mohit Singh said at Hart Energy’s Energy Capital Conference earlier this month.
Gas demand is forecast to grow to provide energy to AI and data centers, but the scale of the growth is unclear. Investors and energy producers are working to cut through AI hype to gauge the tech sector's true energy needs.
Beyond AI demand, U.S. power demand is expected to grow. M&A activity in the power and utilities sector has also “rebounded sharply” over the past year, PwC said.
Power and utilities M&A totaled $77.7 billion from May 2024 through May 2025, up from $43.3 billion in 2023 and $29.6 billion in 2024.
The firm cited two “megadeals” centered around fossil fuel generation: Constellation Energy’s $16.4 billion acquisition of Calpine Corp. and NRG Energy’s $12 billion acquisition of a fleet of natural gas-fired power plants.
Those gas-focused megadeals “highlighted the growing concern around grid reliability and federal signals prioritizing conventional energy,” PwC said.
Expand Energy has reviewed forecasts ranging from 2 Bcf/d to 18 Bcf/d in additional gas demand to support AI and broader power needs, Singh said.
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Tariff uncertainty
Gas and power markets remain robust, but energy M&A momentum has faltered as tariff uncertainty weighs on dealmaking.
A recent PwC survey found that energy sector deals “are most likely to have been put on pause due to tariffs.”
Fluid trade policies and the risk of a full-blown trade war weighed on crude prices, which plunged 20% to around $60/bbl after Trump’s “Liberation Day” policies.
But oil prices have risen recently amid escalating tensions between Israel and Iran and fears of a wider Middle East conflict. WTI crude prices were trading at over $74/bbl near midday on June 18.
Roller coaster market swings have stalled dealmaking as buyers and sellers remain far apart on asset valuations.
Northern Oil & Gas (NOG) has seen several deal processes paused due to widening bid-ask spreads, CEO Nick O’Grady said at Jefferies’ Kiawah Energy Conference last week.
In the meantime, NOG remains focused on smaller ground game transactions to pick up acreage and minerals deals, Jefferies analysts said.
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