Oil & Gas Industry

Q4 2023: Mergers and Acquisitions Trend Report

Industry Overview

• The Oil and Gas (O&G) Industry is one of the largest sectors in the world in terms of dollar value. Oil is crucial to the overall economic framework as it provides over half of the world’s energy.
• The O&G supply chain has a long-standing history of supply chain disruptions, most recently coming from the ongoing Russia – Ukraine conflict and aggressive OPEC export cuts.
• The O&G industry has very high barriers to entry and is completely dominated by leading world governments and various conglomerates.

Key Industry Trends

• Crude oil prices reached an H1 2023 high of ~ $83/barrel, a trend which is expected to continue through Q3 and Q4.
• Rising growth in renewable energy alternatives paired with diminishing oil reserves threaten the industry’s long-term success. US government subsidies for renewable energy doubled from 2016 to 2023.
• Many big-oil titans have begun to acquire renewable energy companies in anticipation of the inevitable transition ahead of the US’s tentative strategy to have net-zero carbon emissions by 2050.

Recent M&A Transactions

Historical Performance

• The Oil Drilling and Gas Extraction industry is highly volatile to geopolitical developments, and this is reflected in industry revenue.
• Over the past five years, revenue has increased to $604.7 Billion, which grew at a 7.48% CAGR.
• In 2020, crude oil prices reached a 21st century low, trading at ~ 15/barrel. This was due to low demand during COVID-19 and pricing wars between Russia and Saudi Arabi.

Future Industry Growth

• Supply chains will heal as the energy trade adjusts to the exclusion of Russia, which should smooth out the volatility of prices. To compensate for the lack of Russian oil, domestic production is expected to grow.
• Industry revenue is estimated to decline at a rate of 5.5% annually to $555.4 billion during the five years ending in 2028.