Dealmaking in the U.S. upstream oil and gas industry reached $38 billion in the first quarter of 2026, marking the strongest quarterly total recorded in two years, according to analytics firm Enverus.
The largest portion of that activity was the closing of the $25 billion merger between Devon Energy and Coterra. The two operators completed their combination last week after announcing the plan in February. Both companies have operations across multiple shale formations, including the Delaware portion of the Permian Basin in Texas and New Mexico, and Oklahoma's Anadarko Basin.
Despite the robust headline number for the quarter, deal activity softened in March. Market participants cited growing crude price volatility following U.S.-Israeli strikes on Iran in February. Those strikes precipitated a wider conflict in the Middle East and caused disruptions to shipping through the Strait of Hormuz, a key chokepoint for seaborne oil exports.
Since the onset of the conflict on February 28, the global benchmark Brent crude futures have traded in a range from $77.74 per barrel up to $118.35 per barrel. That heightened price swings coincided with a pullback in transactions toward the end of the quarter.
Enverus said the outlook for dealmaking could improve if oil prices remain elevated. Higher prices would make it more feasible for private exploration and production companies to pursue sales and could sustain the consolidation trend across the sector.
Context and implications:
- Major corporate combinations can substantially affect capital allocation and scale within the upstream sector.
- Volatile crude markets and regional geopolitical events can disrupt transaction timing and reduce near-term deal flow.
- Higher oil prices may enable more private sellers to enter the market and support additional consolidation among producers.
While the $38 billion figure underscores renewed M&A momentum for the period, the month-to-month softness observed in March highlights how quickly deal activity can respond to geopolitical shocks and price swings. Enverus' assessment points to price levels as a key determinant of whether the sector's consolidation resumes pace in subsequent months.