<div id="readability-page-1"><img width="1152" height="720" src="https://imageproxy.pbkrs.com/https://invezz.com/wp-content/uploads/2025/07/Oil-drill-pumping.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://invezz.com/wp-content/uploads/2025/07/Oil-drill-pumping.png"/>The US shale sector is anticipating a new round of M&amp;A-driven consolidation among small- and medium-sized producers. This trend is mainly fueled by the desire for increased scale in an increasingly competitive deal-making landscape, Rystad Energy said in its latest report.For Exploration &amp; Production (E&amp;P) companies aiming for strong business valuations, scale and efficiency are critical drivers, according to the Norway-based energy intelligence company. Acquisitions, which reward operators for maintaining high volumes and low costs, are becoming a crucial factor in calculating shareholder value, it said.<h2>Scale and efficiency as critical drivers</h2>Smaller E&amp;P companies face limited options to achieve scale and withstand further industry consolidation. Their choices are either to purchase assets divested by larger players or acquire privately held E&amp;P firms. However, neither of these strategies is anticipated to deliver the necessary scale these companies require.Given the need to move higher within their segment or elevate to a top-tier profile for favorable valuations, Rystad Energy believes that smaller operators will now pursue combinations within their peer group, implying a new wave of a merger of equals.“This is likely a shift in strategy due to the scarcity of opportunities and an ever-evolving menu of acquisition options. Although smaller E&amp;Ps are the most likely to be snapped up, they are also on a mission to punch above their weight by acquiring what’s left of the M&amp;A waves experienced over the last two years, which could include non-core assets that ExxonMobil, Diamondback, Occidental, and ConocoPhillips are looking to shed,” Atul Raina, vice president, oil and gas M&amp;A, Rystad Energy, said in the report. <figure><img width="707" height="647" src="https://imageproxy.pbkrs.com/https://invezz.com/wp-content/uploads/2025/12/image-90.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://invezz.com/wp-content/uploads/2025/12/image-90.png"/><figcaption>Source: Rystad Energy</figcaption></figure>The majority of available market assets, typically valued between $500 million and $1 billion, present limited inorganic growth opportunities for potential buyers. This is primarily due to their lack of both high-quality inventory and significant production value, Raina said. <blockquote>Neither this option nor private acquisitions would be able to truly move the needle for smaller buyers.</blockquote><h2>Limited options</h2>According to Rystad Energy, Permian Resources is positioned to be either an acquisition target or an active acquirer in the current market environment. Other companies, including Matador, HighPeak, and Chord, are also considered strong candidates for future M&amp;A activity.Coterra Energy, Ovintiv, and Devon Energy are also potential candidates that may emerge as consolidators or continue to be active in upstream M&amp;A, influenced by strategic portfolio positioning and current valuation dynamics.A potential merger between Coterra and Ovintiv, given their comparable size, natural gas focus, and deep inventory, could offer strategic advantages. Both companies pursue a multi-basin strategy, with Coterra operating across the Permian, Marcellus, and Anadarko regions, and Ovintiv following a similar model. However, despite the merits of this near-equals combination, certain key challenges still need to be addressed.<h2>Key candidates and shifting dynamics</h2>These players face two possible directions: they can pursue inorganic growth by acquiring assets from larger firms, or they can merge with or take over an operator of comparable or smaller size, Rystad Energy said.In contrast to the initial phase of consolidation, where buyers aimed for increased scale in their primary operating areas, recent acquisitions by Crescent and SM prioritise scale even without substantial operational synergy.Having missed the initial surge, these E&amp;P companies are now engaged in mergers at significantly lower multiples compared to those seen over the past two years. Given the diverse nature of their operations, the long-term value of these mergers hinges crucially on their ability to achieve G&amp;A synergies and leverage increased scale to reduce their cost of capital, Rystad said.<blockquote>It remains to be seen whether the market values absolute scale and scale with tangible operational synergies differently.</blockquote>The post Scale and efficiency drive fresh round of consolidation in US shale M&amp;A, says Rystad Energy appeared first on Invezz</div>

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Rystad Energy reports a new wave of M&A-driven consolidation in the US shale sector, driven by the need for scale and efficiency among small- and medium-sized producers. Smaller E&P companies face limited options for growth, leading to potential mergers within their peer group. Key players like Permian Resources, Matador, and Coterra Energy are positioned for future M&A activity. The focus is on achieving scale and reducing costs, with strategic mergers offering potential advantages despite challenges.