A wave of dealmaking in America’s shale patch is intensifying, wiping out weak players and leaving the once-fractured sector in the hands of a new breed of “super independents.”
More than $30 billion in oil and gas deals were done in the second quarter and analysts and bankers expect the run of dealmaking to continue. Investors are pushing shale producers to bulk up in the hopes that larger players will rein in rampant supply growth, deliver better returns and clean up the industry’s operations amid mounting environmental pressures.
“We have way too many players in the sector that are way too undercapitalized and too small to drive the efficiencies and returns that investors need, so we will continue to see consolidation happen,” said Stephen Trauber, a vice-chair and veteran energy banker at Citi.
“If you’re below a $10 billion market cap, it is going to be hard for you to sustain yourself long term,” he added.