Oil and gas companies, under pressure from the coronavirus, continued a rash of shotgun mergers on their way to a third-quarter 2020 M&A tally of $21 billion, according to analysis by Enverus.
Still, the pace of deals during the quarter slackened, and the remainder of the year is likely to see more of the same: a start-and-stop lurch toward consolidation for lower-debt companies. The industry also seems likely to continue condensing as unfavorable commodity prices force companies to stretch their financial reserves to breaking, Andrew Dittmar, senior M&A analyst at Enverus, said in a recent report.
“There is a broad consensus that consolidation is a net positive for the industry,” Dittmar said. “Including the corporate deals from 2019, that process looks to be well underway. There is room for further mergers, but it can be a challenge to find the right asset and balance sheet fits for accretive deals. It may take several more years for consolidation to play out.”