PE Grinds Out Deals While Public E&Ps Struggle With Volatility

The Permian Basin remained the “deal engine” of Lower 48 M&A in the second quarter with $5.5 billion in transactions, according to an Enverus report.

PE Grinds Out Deals While Public E&Ps Struggle With Volatility

About 46% of the second quarter’s total deal value came from a merger-of-equals between Colgate Energy Partners III and Centennial Resource Development in the Permian Basin. Other deals in the quarter focused on large multi-region transactions for nonoperated interests. (Source: Hart Energy)

Second-quarter M&A brought out private-equity (PE) firms looking to cash in on high prices as public company dealmaking was sidelined by volatility in commodity and equity markets, according to a July 14 report by Enverus.

“As anticipated, the spike in commodity prices that followed Russia’s invasion of Ukraine temporarily stalled M&A as buyers and sellers disagreed on the value of assets,” wrote Andrew Dittmar, director at Enverus Intelligence Research, a subsidiary of Enverus. “High prices, though, also encouraged a rush by PE firms to test the waters for M&A. While not everyone that is going into the market is getting what they deem to be a suitable offer, enough are to drive modestly active upstream M&A.”

The Permian Basin remains the main engine of Lower 48 M&A, Enverus said. About 46% of the quarter’s total deal value came from a merger-of-equals between private E&P Colgate Energy Partners III, which is focused on the Delaware Basin part of the Permian, and public Centennial Resource Development.

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Darren Barbee

Darren Barbee is senior editor for Oil and Gas Investor magazine.