Dealmaking in the U.S. upstream oil and gas industry contracted sharply in the second quarter, with announced transaction value falling to roughly $9 billion, about one-quarter of the volume seen previously, according to analytics firm Enverus. The steep drop reflects market uncertainty driven by swings in crude prices and reduced visibility on gas demand.
Andrew Dittmar, principal analyst at Enverus Intelligence Research, said the combination of crude price volatility linked to the Iran conflict and a softening gas outlook likely widened the bid-ask spread and complicated company valuations. "Crude volatility tied to the Iran conflict and a softening gas outlook likely widened the bid-ask spread and complicated valuations, which pushed announced value to one of its lowest quarterly totals in years," he said.
The single largest contribution to the quarter's deal total was a Bureau of Land Management lease sale in May, which generated about $4 billion by auctioning oil and gas drilling rights on federal lands in Texas and New Mexico. The sale was dominated by purchases from Devon Energy and Matador Resources, and covered 33,530 acres, primarily in New Mexico's Permian basin, part of the nation's most productive oilfield.
Enverus noted that a shortage of drilling locations in the U.S. that produce higher volumes of oil helped spur intense competition for the BLM parcels, lifting bid levels and concentrating deal value in the federal lease sale.
Following the BLM sale, the largest announced corporate transaction in the quarter was Shell's June divestiture of its interest in the Na Kika platform and associated fields in the Gulf of Mexico. The assets were sold to subsidiaries of Talos Energy and Ridgewood Energy for roughly $1.7 billion. Those Gulf assets were projected to produce about 37,000 barrels of oil equivalent per day in 2025.
Measured by announced value, the second quarter was one of the weakest since 2020, a year when the COVID-19 pandemic severely depressed oil demand and prices. From April to June, Brent crude futures closing prices swung from a high of $118 a barrel to a low of $72, according to LSEG, as the war in Iran continues to disrupt energy flows across the globe.
The concentration of transactional value into a single federal lease sale and one major corporate divestiture underscored a broader market pause, with volatility and uncertain gas fundamentals limiting activity elsewhere. Market participants and observers cited both the difficulty of valuing assets in such an environment and the limited supply of premium drilling locations as factors shaping the subdued quarter.