Dealmakers consolidate and wait: Q4'23 M&A trends in energy and natural resources

In the energy, natural resources, and chemicals (ENRC) sector, dealmakers face consolidation with caution. This quarter, oil and gas (O&G) majors' acquisitions contributed to 93 percent of total ENRC deal value, including Exxon Mobil, Chevron, and Occidental Petroleum. Legislative advancements spurred renewable energy investments in solar and battery storage, while the chemicals industry battled recession which led to cautious deal-making.

Key takeaways from the ENRC sector:

• O&G majors focused on traditional energy sources, acquiring assets in strategic locations such as West Texas, North Dakota, and the coast of Guyana.
• The chemicals industry faces various challenges, including high interest rates, global conflicts, reduced demand, and increased feedstock costs.
• The power, utilities, and renewable energy industries concentrated on divestments and investments in renewables and green sectors that were driven by voluntary carbon reduction plans and legislation.
• Private equity M&A deals encountered hurdles due to valuation gaps and difficulties in capital return from existing investments.

Looking forward to 2024, factors like geopolitical uncertainty and tight monetary policies are anticipated to limit global economic growth and impact the ENRC sector. M&A deals will center around scaling and optimizing assets, entering growing markets, and reducing back-office costs. However, interest rate concerns, potential recession risks, and leadership changes may impact the market outlook.

Investors should stay agile in growth strategies, consider large corporate carve-outs, and stay informed about opportunities like generative AI tools in M&A deal-making.

Uncover valuable insights to successfully navigate the dynamic ENRC M&A environment by delving into our full report, Dealmakers consolidate and wait: M&A trends in energy and natural resources, which provides an in-depth analysis. Download it now to learn more.