Resilience despite uncertainties: Q1'24 M&A trends in ENRC

In the first quarter of 2024 (Q1’24), the energy, natural resources, and chemicals (ENRC) sector has exhibited a strong appetite for consolidation and asset acquisitions, specifically within the oil and gas (O&G) industry. A well-developed and proven integration playbook has emerged as a necessity to ensure deal value in this climate of escalating M&A deal size, scope, and complexity.

A successful integration goes beyond an execution challenge; it is a value-creation opportunity. It requires firm understanding and management support for the value proposition and new operating models. This includes comprehensive insights into the crucial decisions needed to be made at every stage of the integration process.

Here are some key trends and insights from the first quarter:

The industry's M&A landscape was characterized by major deals, such as Exxon Mobil's acquisition of Pioneer Natural Resources for $60 billion, Chevron's acquisition of Hess for $53 billion, and Occidental Petroleum's acquisition of CrownRock for $12 billion—emphasizing the importance of a robust integration plan.

• The sector saw 278 deals, a 1% decrease from the previous quarter. However, deal value dropped by 46% compared to the previous quarter, totaling $93 billion.
• There's been a surge in upstream and midstream mergers, with companies keen to enhance operations, boost production capacity, and increase market share.
• Investments in renewable energy, specifically solar assets, have substantially risen as part of efforts to reduce carbon emissions. A 90.5 percent quarter over quarter increase in deal volume signifies this inclination.
• Despite facing a fifth consecutive quarter of sales declines, the chemicals industry is proactively moving towards sustainable practices in line with regulatory pressures and market trends.

As we move forward, it is vital for dealmakers to remain vigilant, emphasizing proper due diligence and recognizing the potential synergies and cultural differences that could influence a merger's success. Download our paper to gain insights on M&A in the ENRC sector.