US upstream oil and gas mergers and acquisitions slowed in Q2, plunging 76% from the previous quarter to $9.1 billion amid commodity price volatility, though robust competition for premier acreage points to a rebound in H2 2026, Enverus strategists said on Wednesday.
Enverus analysts said that Q2 deal value marked the third-lowest quarterly total since 2020 and a 33% decline from the same period a year ago. The prior quarter's figures had been inflated by Devon Energy's (DVN) mega-merger with Coterra Energy (CTRA), the analysts said.
However, despite the headline drop, over 40% of the quarter's total deal value came from the Bureau of Land Management's record-setting New Mexico lease sale, which generated more than $4 billion and shattered the previous auction record of $972 million set in 2018.
"The quarter looks weak on the headline number, but that understates the strength of the underlying bid for inventory," said Andrew Dittmar, principal analyst at Enverus Intelligence Research.
Dittmar said that crude volatility tied to the Iran conflict and a softening gas outlook likely widened the bid-ask spread and complicated valuations.
Enverus said that it views the slowdown as a temporary negotiation obstacle rather than a fundamental demand issue, noting that public companies remain willing to pay rising prices for tier-one Permian acreage.
Public operators dominated the landscape during the quarter, leading bidding at the BLM lease sale, where Devon Energy and Matador Resources (MTDR) secured high-priced Permian positions.
Furthermore, Diversified Energy (DEC) partnered with Carlyle to acquire the majority of Camino Natural Resources in the Anadarko Basin, while Talos Energy (TALO) continued its consolidation of mature Gulf of Mexico assets.
Private equity and asset-backed securitization buyers also maintained a strong presence, accounting for nearly 30% of asset-level deal flow for the second consecutive quarter.
Over the past year, ABS-fueled buyers such as Flywheel Energy and Jonah Energy have absorbed roughly $10 billion in assets. Jonah deployed fresh capital into the Mid-Continent region during the quarter with a $1 billion purchase from Scout Energy Partners.
The influx of ABS capital has transformed the Anadarko Basin into a leading M&A hub, with more than $5 billion transacting year-to-date.
Enverus projects this funding model to expand geographically into mature, oil-weighted profiles such as the DJ and Williston basins.
Meanwhile, the data analytics firm said scarcity of quality oil-weighted drilling locations continued to drive aggressive competition.
Following the BLM auction, EnCap Investments' Paloma Permian fetched a strong premium in its July sale to Matador for $1.3 billion. Outside the Permian, Eagle Ford inventory captured strong buyer interest, highlighted by WildFire Energy's sale to Magnolia Oil & Gas for just over $4 billion.
The high-valuation environment crossed borders during the quarter. Shell's (SHEL) $16.4 billion acquisition of ARC Resources in April drove total Canadian announced deal value above US levels, a rare occurrence, as international firms bet on Canada's deep resource base and improving infrastructure.
Gas-directed M&A faced headwinds in Q2 as near-term market fundamentals weakened and acquisition targets in gas plays like the Haynesville grew scarce.
However, Enverus said that longer-term demand expectations tied to liquefied natural gas exports remain solid, pointing to an eventual return of international capital to US gas production.
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