Page 6 - NorthAmOil Week 40 2021

NorthAmOil COMMENTARY NorthAmOil

Shale deals close as consolidation

wave slows

Two major M&A deals between shale producers have closed in recent days, against the

backdrop of a slowdown in the wave of industry consolidation

US TWO major shale deals have closed in recent small players funded by private equity firms that
days. On October 1, Cabot Oil & Gas and are seeking to exit their investments at a time
WHAT: Cimarex Energy announced that they had com- of higher oil prices. However, the main wave
Two large M&A deals pleted their amalgamation, creating an entity of consolidation that started in the second half
between shale producers named Coterra Energy. This was followed on of 2020 appears to be coming to an end at this
have closed in recent October 5 by Callon Petroleum’s announcement point.
days. that it had completed its acquisition of all the
assets of Primexx Energy Partners. Deals completed
WHY: The closing of these deals comes as the wave The $9.3bn merger between Cabot and Cimarex
The deals formed part of consolidation that they were part of is slow- stands out among recent mergers because it
of a wave of industry ing down after a busy second quarter of the involves a tie-up of two players in different
consolidation that is now year. According to data analytics Enverus, there regions, whereas the majority of recent deals
slowing. were $33bn worth of announcements on US have involved operators building scale in a single
upstream mergers and acquisitions (M&As) in core focus area.
WHAT NEXT: the second quarter – the highest level since the Cabot’s operations were entirely focused on
Many producers are now same quarter of 2019. the Appalachian Basin’s Marcellus shale gas play,
focusing on integrating Enverus has not yet released its third-quar- while Cimarex was primarily an oil-focused
the assets they have ter M&A findings, but the latest quarter saw producer in the Permian Basin and Mid-Conti-
taken on through M&As fewer, smaller deals as the major players turned nent areas. Their merger announcement in May
with their existing their attention to integrating the assets they had came as a surprise to analysts.
operations. recently acquired into their existing operations. The combination – one of the largest deals to
This trend appears set to continue. Further be struck this year – creates a company with an
M&A potential still remains, especially among enterprise value of around $17bn. Coterra has

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