Despite expectations that M&A activity would rebound in 2018, it’s not quite happened so far this year. But analysts are positive that it’s just a matter of time.

In fact, Andy Brogan, global oil and gas transactions advisory services leader at EY, said this is the busiest the business consulting firm has been around oil patch deal activity in the past 10 years.

Rising commodity prices, albeit with some volatility, and an expectation that shale would continue to grow are setting the broader oil patch scene. In addition, a technology-driven cost reduction in deep water is driving expansion offshore and private-equity investment has flowed into the market as well. Still, companies are also taking longer-term “optionality”—investing in alternative and renewable energies, Brogan said during an EY webinar in early July.

“The direction of travel that the industry is now on, with the rapid deployment and the accelerating deployment of engineering, topside and back-office technology; the broader range of capital providers and investors that are coming into the industry; and the uncertainties around the long-term outlook for the energy mix, all point to a period of time where significant portfolio decisions need to be enacted and significant M&A need to happen as a result,” he said.

As a result of the combination of these drivers, EY is predicting an uptick in upstream M&A activity, at least in terms of volume, said Jon Clark, EY’s EMEIA oil and gas transactions advisory services leader.

“We're aware of a number of assets potentially coming to market and a number of better-capitalized clients trying to reposition their portfolios,” Clark said.

Out of all the companies, the ones probably going through the most reinvention are the majors, he said. “They are doing some hugely exciting things strategically, but still have massive upstream portfolios as well, so I think they are going to be the most active.”

The independent E&Ps might need to do “the most thinking about their future transaction strategy,” Clark said adding that this might be different in North America compared to the rest of the world.

“Those independents who have built businesses with the mindset of ‘if we find oil or gas someone will buy us,’ probably need to have a bit more of a think around what the market is for that product and what the future looks like,” he said. “I think the independents could be more active out of both opportunity and necessity.”

Clark said the U.S. continues to be the center of M&A activity for the upstream sector. In aggregate five of the top 10 deals in the first-half of 2018 were in the Americas.

“Europe has probably seen the biggest drop in activity, but that's really not a reflection of less people wanting to transact,” he said. “A year ago, there were a small number of big deals on the market.”

In 2017, private equity-backed Chrysaor Holdings Ltd. bought a large portfolio of U.K. North Sea oil and gas assets from Royal Dutch Shell Plc (NYSE: RDS.A) for $3 billion. In addition, Neptune Oil & Gas Ltd. acquired an even larger portfolio with the acquisition of a majority stake in Engie SA’s E&P business last year. The $3.9 billion acquisition included assets in several fields in the U.K. and Norwegian North Sea.

“But, that's just a small number of big things,” Clark said. “Today, there are more but still significant things going on in Europe.” He noted that Chevron Corp. (NYSE: CVX) and Total SA (NYSE: TOT) have recently put packages of assets worth more than $1 billion on the market.

“I think this focus on the mid-size or upper mid-market transaction is reflective of the portfolio optimization trend we have been seeing,” he said. “The proportion of megadeals have declined.”

The top 10 deals from first-half 2018 represented $25 billion in value vs. $48 billion a year ago. But, conversely, portfolio-shaping deals in the $100 million to $1 billion range have increased.

“If we look to the future, there are certainly a few big deals out there that we expect to crystallize in the second half,” Clark said. “Value-wise, I think we will see an increase. There’s a lot of continuing activity in the portfolio, so I’m confident the volume of activity will remain robust in the upstream. But we also see much more thinking beyond the world production and I think that’s going to see a degree of a shift in focus towards the midstream, downstream and other energy types of transactions as oil companies pivot somewhat to becoming more of an energy fuel and mobility company rather than a fuel production company.”

For Clark, there are three main themes: what types of portfolio companies have; technology; and an uncertain demand outlook for oil and gas.

“Technology is going to continue to have a significant impact, particularly in shaping some different views around things like unconventionals and where does deep water fit,” he said. “But, there's an uncertain future demand outlook for oil and gas.”

Clark said everyone is certain that hydrocarbons are going to play an important part in the global energy mix, but nobody is certain what percentage that will be.

“People are trying to grapple with this new energy outlook, this future demand uncertainty and what we are seeing is many of our clients thinking through their portfolio,” he said.