The third quarter of 2023 has witnessed a surge in merger and acquisition (M&A) activity in the US upstream sector with a total of 25 deals valued at $14 billion, according to Energy Intelligence Research (EIR). This trend signifies a drive towards corporate consolidation, with public companies accounting for two-thirds of the deal value.
In October, ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) led the charge with high-profile acquisitions. ExxonMobil acquired Pioneer Natural Resources (NYSE:PXD) for $65 billion, while Chevron purchased Hess (NYSE:HES) for $60 billion. These transactions were noted by EIR's Senior Vice President Andrew Dittmar.
ExxonMobil has been steadfast in its traditional energy business while also striving to decarbonize its operations. The company aims to meet emission targets through reducing upstream emissions and advancing its carbon sequestration business. John Gutentag from Enverus highlighted that ExxonMobil's acquisition of Pioneer not only enhances its Permian portfolio but also propels the region towards a low-carbon future.
In terms of emission targets, ExxonMobil has set ambitious goals. The company aims for net-zero emissions by 2030 for its existing Permian assets and by 2035 for the newly acquired Pioneer assets. These targets far outpace Pioneer's original plan.
The recent acquisitions by ExxonMobil and Chevron could potentially trigger further consolidation among smaller oil and gas firms seeking competitiveness. This trend is expected to dominate the upstream M&A landscape in the foreseeable future.
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