Upstream M&A falls 13% year-over-year in 2022 to $58B

Deal count plunges to the lowest level since 2005 as buyers selectively target top-tier assets in large deals

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CALGARY, Alberta (January 24, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, is releasing its summary of 4Q22 upstream merger and acquisition (M&A) activity. For 2022, U.S. upstream M&A saw $58 billion transacted in 160 deals, including $13 billion from 26 deals in the fourth quarter. While deal values are down just about 20% from pre-pandemic averages, the volume of deals has collapsed to a nearly two-decade low as activity has been driven by large companies targeting the highest quality assets in billion-dollar-plus deals.

“Large-cap public companies like Devon Energy, Diamondback Energy, and Marathon Oil dominated deal activity in the back half of 2022,” said Andrew Dittmar, director at Enverus Intelligence Research. “These buyers have the balance sheet strength and favorable stock valuations to take advantage of large, high-quality offerings from private sellers. Critically, they can strike deals that both accretive to current cash flow and extend their runway of drilling locations. For smaller companies, which are still having their equity value discounted, it is challenging to thread the needle of buying assets at accretive multiples and being able to pay for inventory.”

Top 5 U.S. upstream deals of 4Q22

DateBuyersSellersDeal TypeU.S. PlayValue ($MM)
10/17/22Hamm FamilyContinental ResourcesCorporateMultiple$5,219
11/02/22Marathon OilEnsign Nat. Res.PropertyEagle Ford$3,000
10/11/22DiamondbackFirebird EnergyPropertyMidland$1,592
11/16/22DiamondbackLario Oil & GasPropertyMidland$1,548
11/02/22Sable OffshoreExxonMobilPropertyConventional$625
Source: Enverus M&A Analytics.

Two of the largest deals in the fourth quarter of 2022 were Midland Basin acquisitions by Diamondback, historically one of the more active buyers in the region. Cumulatively, the company spent a little more than $3 billion to add nearly 500 new drilling locations that are highly economic in the current oil price environment. For Diamondback, adding inventory is more of a luxury than a necessity as the company already has more than a decade’s worth of top-tier inventory. Marathon is also well positioned with about 10 years’ worth of drilling locations economic down to $45/bbl. The company still added another 550 locations to its portfolio though when it purchased private Ensign Natural Resources in the Eagle Ford’s largest deal since Chesapeake purchased WildHorse Resource Development for nearly $4 billion in late-2018.

“E&Ps of all sizes have proven to investors they can be profitable and pay dividends,” added Dittmar. “Now the key question is how long they can sustain profitable margins, determined by commodity prices which they can’t control and the quality of their drilling opportunities which they can control, at least to an extent. Inventory life is where large caps have a substantial advantage over smaller rivals and investors recognize that by giving them a premium on their stock. In turn, they can use that premium to buy more assets. It is a market where the rich get richer.”

Private equity sellers have accounted for most of the assets on the market in recent years, and Enverus anticipates that trend continuing. These capital providers still have substantial investments in oil and gas they are looking to unwind, either because they are coming up against the end of a fund life, for ESG reasons, or both. Public companies’ concurrent appetite for inventory is giving them an ideal window to sell. That said, there are few fire-sale bargains to be had, and sellers are willing to walk away from a deal if none of the offers meet their minimum price. That further makes it challenging for small companies.

“There are a few options available for small cap companies struggling to secure inventory in the current market,” added Dittmar. “Corporate M&A hasn’t been a significant part of the market since 2020, but we could see a return to public company deals this year either from small companies combining in mergers of equals to build scale and hopefully get a higher multiple on their stock or selling to larger competitors that already trades at a premium valuation.”

Most likely, however, these smaller companies will stay independent and focus on adding less expensive inventory in areas like the Permian Rim or Powder River Basin. They could also try to capitalize on non-core assets shed by large cap companies. Already in 2023, Chesapeake Energy sold its Brazos Valley asset at what looked to be a buyer-friendly price, although that was scooped up by private WildFire Energy rather than a small cap public buyer. If large, strategic M&A is too expensive, smaller companies could also look to build inventory block-by-block in a return to a higher volume but lower deal value M&A market. That is the type of transaction Permian Resources has already struck early this year as they added incremental high-quality inventory at an attractive price in the New Mexico portion of the Permian.

Another interesting type of corporate M&A, but one unlikely to play a major role in the market, is public companies being taken private. A go-private transaction accounted for the largest deal of 4Q22 when the Hamm family acquired the public portion of Continental Resources for more than $5 billion. However, that was a unique situation because they already owned most of the company. A few others could be in the same position such as Comstock Resources, largely owned by Jerry Jones, or, on a larger scale, Berkshire Hathaway trying to consolidate Occidental Petroleum as a private investment.

Overall, the need for public companies to secure inventory is likely to keep the M&A market active in 2023. “The challenge for deals, as is often the case in this industry, will be bridging the bid-ask spread and navigating commodity price volatility,” concluded Dittmar. “Oil prices are likely to be steady or rising during the first half of the year while gas struggles, meaning more oil deals and fewer for gas to start 2023. However, we could see interest in buying gas assets mid-year to take advantage of low prices ahead of a U.S. LNG export ramp that will eventually drive gas higher.”

Members of the media can contact Jon Haubert to request a copy of the full report or to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.

Media Contact: Jon Haubert | 303.396.5996



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