(Reuters) — Mergers and acquisitions in the U.S. oil and gas sector tripled last year despite softer commodity prices as energy companies boosted spending to improve efficiency and profits, according to a report released on Aug. 19.\n\nWhy It’s Important\nThe jump in dealmaking marks a shift in strategy after years of focusing on shareholder returns over growth as commodity prices retreated from their 2022 high.\n\nContext\nThe sector-wide consolidation has been led by a handful of megadeals by large players, including Exxon Mobil, Diamondback Energy and ConocoPhillips.\n\nKey Quote\nCompanies flush with cash were focused on driving efficiency through scale, said Bruce On, partner at EY's strategy and energy transactions group.\n\n“It’s a relook at process, tools, workforce and everything around your operations,” On said.\n\nBy The Numbers\nLeading energy companies spent $206.6 billion on mergers and acquisitions in 2024, up from $47.9 billion the previous year, according to an Ernst & Young study published on Aug. 19.\nOil and gas companies cut spending on dividends and share repurchase payments by about 25% last year to $29.2 billion.\nMoney spent on tapping oil and gas also fell slightly, with exploration and development expenditure down 7% year on year at $85.5 billion.\nProfits fell 10% last year to $74.8 billion, less than half the record level recorded in 2022, primarily owing to soft commodity prices, the report said.\nExxon Mobil was the biggest buyer in 2024 with total property acquisition costs of $84.5 billion. The company announced the acquisition of U.S. shale oil producer Pioneer Natural Resources in October 2023 and completed the $60 billion purchase last May.

U.S. Oil and Gas M&A Tripled in 2024 Despite Lower Prices

Mergers and acquisitions in the U.S. oil and gas sector tripled in 2024, reaching $206.6 billion, despite softer commodity prices. Energy companies increased spending to improve operational efficiency and profits, shifting from a focus on shareholder returns to strategic growth through consolidation. Key deals were led by major players such as Exxon Mobil, Diamondback Energy, and ConocoPhillips. Exxon Mobil was the largest acquirer, spending $84.5 billion on property acquisitions, including the $60 billion purchase of Pioneer Natural Resources completed in May 2024. Overall, companies reduced spending on dividends and share repurchases by 25% to $29.2 billion, while exploration and development spending declined 7% to $85.5 billion. Profits fell 10% to $74.8 billion due to lower commodity prices.