FPSO Prosperity working at ExxonMobil's third oil project on the Stabroek Block offshore Guyana; Source: ExxonMobil

Mergers and acquisitions: Blockbuster oil & gas market consolidation moves in 2023

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FPSO Prosperity working at ExxonMobil's third oil project on the Stabroek Block offshore Guyana; Source: ExxonMobil

The oil and gas industry is evolving and innovating to keep up with the latest low-carbon trends and ensure its survival in a carbon-free world, primarily with the help of carbon capture, utilization, and storage (CCUS), electrification, and other emission reduction technologies and tools. In a bid to become bigger and better, the industry became a hotspot for multi-billion mergers and acquisitions in 2023 while hinting at further consolidation in the fossil fuel machinery down the road.

While there is a wide spectrum of deals to choose from to illustrate the consolidation steps taken during 2023, the top spots were snagged by a series of colossal multi-billion deals brought to life by oil and gas industry giants like ExxonMobil, Chevron, Occidental (Oxy), Harbour Energy, and Woodside. One of the regions that emerged as the main merger and acquisition playground is the shale oil-rich Permian basin in the southern United States. Wood Mackenzie, an energy market research and consultancy firm, recently pointed out that the region tucked over $100 billion in deals under its belt in 2023.

The biggest consolidation move comes from ExxonMobil, which is in the process of expanding its footprint in the U.S. even further, thanks to a definitive agreement to acquire Pioneer Natural Resources in an all-stock transaction, which is valued at $59.5 billion, or $253 per share, based on ExxonMobil’s closing price on October 5, 2023. Following the merger, the two players will have an estimated 16 billion barrels of oil equivalent resources in the Permian. 

Combining Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland basins, this merger has an implied total enterprise value, including net debt, of approximately $64.5 billion. The oil major believes that this deal will strengthen the U.S. economy and energy security while also contributing to net-zero goals.

ExxonMobil plans to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions from its Permian unconventional operations by 2030. As part of the transaction, the U.S. giant intends to leverage its Permian greenhouse gas reduction plans to accelerate Pioneer’s net-zero emissions plan by 15 years, to 2035.

Furthermore, ExxonMobil is pursuing more than $20 billion of lower-emissions opportunities through 2027, representing the third increase in the last three years, from an initial $3 billion in projects identified in early 2021. This is in addition to the company’s recent $5 billion all-stock acquisition of Denbury, which expanded carbon capture and storage (CCS) opportunities through access to what is said to be the largest CO2 pipeline network in the United States.

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Another U.S. oil major, which is keen on expanding its portfolio is Chevron. To this end, the company agreed to buy Hess Corporation in a $53 billion all-stock deal, which should close in the first half of 2024, subject to Hess shareholder approval, regulatory approvals, and other customary closing conditions. While Hess shareholders will receive 1.0250 shares of Chevron for each Hess share, the total enterprise value of the transaction, including debt, is $60 billion.

Following the closing of the acquisition, Chevron’s annual capex budget is expected to be between $19 and $22 billion. The Hess acquisition will upgrade and diversify the U.S. giant’s portfolio, enriching it with more shale assets and those in Guyana’s Stabroek block. Without a doubt, the Permian Basin is the star of merger and acquisition deals in 2023. Oxy moved to acquire CrownRock in December 2023 for cash and stock in a transaction valued at approximately $12 billion, including the assumption of CrownRock’s debt.

This move enhances Oxy’s Permian portfolio with the addition of around 170,000 barrels of oil equivalent per day of high-margin, lower-decline unconventional production in 2024, as well as about 1,700 undeveloped locations. According to Wood Mackenzie, the completion of this merger will establish Oxy as a top three producer in the Permian behind the oil majors.

Robert Clarke, Vice President of Upstream Research at Wood Mackenzie, commented: “This transaction cements an absolute banner year in Permian acquisitions and divestments spend. Coupled with other mega 2023 deals like ExxonMobil and Pioneer, it solidifies Permian scale and multi-decade longevity as a ‘must have’ trait for U.S. majors and super-independents.”

A portfolio expansion announcement also came from Harbour Energy, which inked a deal to acquire Wintershall Dea‘s entire non-Russian oil and gas portfolio along with carbon capture and storage assets in Europe to bring one of the world’s largest and most geographically diverse independent oil and gas companies to life. This $11.2 billion share and cash deal boosts Harbour’s portfolio with producing and development assets as well as exploration rights in Norway, Argentina, Germany, Mexico, Algeria, Libya, Egypt, and Denmark.

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Additionally, the acquisition will enable the London-listed player to reap the benefits of increased reserve life and improved margins with lower operating costs and greenhouse gas intensity. The acquisition also supports Harbour’s energy transition goals, thanks to a strong pipeline of European CCS projects with the potential to store more than 10 mtpa of CO2.

Linda Z Cook, CEO of Harbour, commented: “The addition of Wintershall Dea’s assets will increase our production to over 500 kboepd, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run. Importantly, the acquisition also advances our energy transition objectives by shifting our portfolio towards natural gas, lowering our GHG emissions intensity and expanding our CCS interests into new European markets.”

Last but not least, a potential A$79.09 billion (about $52.19 billion at the time of the announcement) merger between two Australian energy giants, Woodside Energy and Santos, is a sign of further consolidation in the oil and gas industry. If these two heavyweights come together, the merger is anticipated to unlock more growth opportunities and create an Australian gas market giant.

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Aside from shale oil, the U.S. players are also actively pursuing more liquified natural gas (LNG), which signifies a $100 billion opportunity. Wood Mackenzie’s Sean Harrison recently pointed out that three U.S. LNG projects –  Plaquemines LNG Phase 2, Port Arthur LNG Phase 1, and Rio Grande LNG Phase 1 – secured over $40 billion in financing during 2023, allowing them to take a final investment decision (FID). Despite rising capital costs and interest, more projects aim for finance in 2024.

“While risks do remain, equity infrastructure investors and major LNG players are showing a continued interest in U.S. LNG. Therefore, developers who can mitigate costs, secure credit-worthy off-takers and partners, overcome regulatory hurdles, and showcase the ability to access upsides will be well-placed to attract further investment as they seek to sanction projects,” concluded Harrison.

The gas-oriented assets and operations have been highly sought after recently, as hammered home by the acquisition of Neptune Energy’s entire portfolio – aside from its operations in Germany and Norway – which is being acquired by the European oil major, Eni.

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While the German operations will be carved out before the completion of this acquisition, the Norwegian assets will be taken over by the Italian oil major’s majority-owned Vår Energi. These deals come with an aggregate enterprise value of $4.9 billion.



𝐃𝐨 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐠𝐫𝐚𝐛 𝐭𝐡𝐞 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐢𝐧 𝐨𝐧𝐞 𝐦𝐨𝐯𝐞? 𝐋𝐨𝐨𝐤 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝐎𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐄𝐧𝐞𝐫𝐠𝐲! 𝐎𝐮𝐫 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐫𝐞𝐚𝐝 𝐛𝐲 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐞𝐧𝐠𝐚𝐠𝐞𝐝 𝐢𝐧 𝐨𝐢𝐥 & 𝐠𝐚𝐬, 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞, 𝐨𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐰𝐢𝐧𝐝, 𝐠𝐫𝐞𝐞𝐧 𝐦𝐚𝐫𝐢𝐧𝐞, 𝐡𝐲𝐝𝐫𝐨𝐠𝐞𝐧, 𝐬𝐮𝐛𝐬𝐞𝐚, 𝐦𝐚𝐫𝐢𝐧𝐞 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐟𝐮𝐞𝐥𝐬, 𝐬𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐨𝐧 𝐚 𝐝𝐚𝐢𝐥𝐲 𝐛𝐚𝐬𝐢𝐬.

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