For any market, M&As, or mergers and acquisitions, play an essential role in determining the performance of the sector. And the US upstream M&A numbers are pointing to a troubling year ahead in 2026. This time of the year comes with a wave of forecasts and predictions for the energy sector as the market plans for the road ahead, and several industry analysts and experts have noted a slowdown in the United States’ mergers and acquisitions levels for 2025. They note that the expectation is for the trend to extend into the new year.
Following a great start to 2025, the upstream M&As in the US have slumped consistently
The start of 2025 saw great numbers being reported in the United States M&As that swept across the upstream sector. However, the next three quarters saw significant declines, and now, the trend is set to continue into the new year as the world faces increasing market uncertainty. Due to the ongoing war in Ukraine, a vast majority of investors view the upstream sector as a volatile beast that has been let loose on the international energy market.
Persistently low crude prices have exacerbated the concerns that industry experts have for the new year. Citing the fluctuating energy market prices as a major contributor to less-than-favorable performance this year. The vast majority of the activity in the recent past has been dominated by oil-weighted private equity-backed oil and gas companies.
“Crude prices in the mid-$60s or worse have made it tough for sellers, especially private equity firms with oil-weighted assets. Most remaining shale M&A opportunities need stronger pricing to justify public companies paying for the undeveloped locations.” – Andrew Dittmar, principal analyst at EIR
Strategic consolidation and targeted acquisitions have become the name of the game
To foster a return to form, energy experts have noted the need to form strategic consolidation and increased targeted acquisitions for M&As moving forward into the new year. M&As have not completely deserted the energy sector, as evidenced by the recent Crescent Energy’s (CRGY) acquisition of Vital Energy (VTLE) for more than $3 billion in stock and assumed debt.
Adding to that positive news is the report that states that the California Resources Corporation (CRC) has acquired Berry Petroleum (BRY) for approximately $717 million. Natural gas has emerged from the darkness of recent trends as a bright spot for the upstream energy sector, with potential buyers maintaining a positive outlook as more data centers are commissioned that require vast amounts of the energy resource to operate efficiently.
“The market is adapting to lower oil, and we expect strategic consolidation and targeted acquisitions to keep M&A activity moving forward.” -Andrew Dittmar, Principal Analyst, Enverus Intelligence Research
European gas prices have eased a bit this year as the world enters a new future without Russian energy in all its forms. The latest round of sanctions on Russian energy by the European Union, as well as the United States, has placed more uncertainty on the international upstream sector, as most potential buyers aim to wait it out to see how the situation develops.
Energy mergers and acquisitions have slumped following new sanctions on Russian energy
With the war in Ukraine persisting with no end in sight, the international community has contemplated the best offensive to take that does not include a full-scale war with Russia, as that would most likely lead to a serious global conflict with unprecedented consequences. The result is that the European Union has approved a deadline of 2028 to end all Russian gas contracts, with the US imposing substantial sanctions on Lukoil, a major Russian energy company. The upstream energy market has become extremely volatile, and the future of the M&As is in peril.
