[Editor's note: A version of this story appears in the March 2021 issue of Oil and Gas Investor magazine.]

The A&D market in the U.S. fell to a multi-decade low in 2020 on the heels of OPEC+ maintaining crude oversupply while COVID-19 simultaneously dented global hydrocarbon demand. Although headline numbers appeared only moderately down—approximately $50 billion in announced deals versus a “typical” year at $60 billion to $80 billion—the true narrative is revealed after a handful of large M&A transactions are removed.

Eliminating just four of the approximate 60 transactions announced in 2020 (i.e., Chevron Corp./Noble Energy Inc., Devon Energy Corp./WPX Energy Inc., ConocoPhillips Co./Concho Resources Inc., Pioneer Natural Resources Co./Parsley Energy Inc.) results in only some $12 billion in 2020 activity, split roughly 50:50 between asset- and corporate-level transactions.

Asset-level divestitures accounted for less than $7 billion in volume versus a typical year of some $40 billion to $50 billion, while averaging only about $120 million per transaction—the lowest level over the past decade (and approximately 50% lower than 2019).

It was truly a year to forget.

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