By Georgina McCartney
HOUSTON (Reuters) – The oilfield services sector is poised for more consolidation in 2025, according to Deloitte’s 2025 Oil and Gas Industry Outlook, with President-elect Donald Trump expecting relaxed regulations for the U.S. oil and gas industry.
The revival in the number of deals in the services sector is said to be the result of a wave of mega mergers among oil producers and others ExxonMobil (NYSE:) and Natural resources pioneer (NYSE:) and ConocoPhillips (NYSE:) and Marathon oil (NYSE:).
Small oilfield companies could look for favorable acquisitions as their customer bases consolidate and shrink, according to Deloitte, the world’s largest consulting firm, due to rampant mergers and acquisitions among upstream customers.
WHY IT’S IMPORTANT
Deals in the U.S. shale belt have shrunk oilfield companies’ customer bases, particularly in the fertile Permian Basin that straddles Texas and New Mexico. According to the EIA, that field is expected to produce 6.51 million barrels of crude oil per day in 2025, up from 6.29 million barrels per day in 2024. It accounts for just under half of total U.S. production.
BY THE NUMBERS
Deals in the oilfield services sector reached $19.7 billion in the first nine months of 2024, the highest level since 2018, Deloitte said.
Buyer interest in oil rigs increased in 2024, with deal values reaching $3.8 billion, the second highest level since 2018.
KEY QUOTES
“We think the new administration could be positive for M&A, and we will see some more easing around that as it has become increasingly difficult to get M&A done in recent years,” said Deloitte’s global sector leader for oil , gas and chemistry. said John England in an interview.
US lawmakers have asked the Federal Trade Commission (FTC) for greater oversight of multi-billion dollar deals.
Gas producers Chesapeake Energy (NYSE:) and Southwestern Energy (NYSE:) have postponed their $7.4 billion merger after the FTC requested further information in April. The companies closed the deal in October. Exxon Mobil and Pioneer Natural Resources received similar requests from the FTC in connection with their $60 billion merger, which closed in May.
“A fairly fragmented oilfield services market and some government easing set a nice stage for potential consolidation,” England said.
