Q3 data shows shale industry hot as ever

By Staff | October 05, 2018

New data from Austin-based software-as-a-service and data analytics firm Drillinginfo shows that interest by investors and companies to partake in the shale industry is as hot as ever.

According to the company, U.S. oil and gas M&A activity in Q3 this year rose above 250 percent over Q2 to reach $32 billion. The rise has broken all quarterly records dating back to 2012.

Brian Lidsky, senior director for Drillinginfo, said the company expects activity to continue. “The industry is regularly reporting record well results across the U.S. shales as it continues to de-risk acreage positions and advance technology,” he said.

Themes and Drivers Looking Forward:

  • Expect continued high pace M&A activity in the next 6-12 months.
  • $30 billion of U.S. deals for sale provide high quality inventory for deal activity.
  • Consolidation within shale plays likely to increase in momentum as scale and efficiency rewards larger players.
  • Private capital will be leaders in de-risking fringe areas of known plays plus deploying latest technologies to new areas like the Powder River Basin, as an example.
  • Permian takeaway constraints present strategic opportunities over the next 18 months.
  • Wall Street mandate for positive cash flow is favoring larger companies from an equity valuation perspective as acreage positions in Tier 1 areas provide strong visibility.
  • The energy sector of the S&P 500 remains under-represented from a historical viewpoint and upside exists driven by higher oil prices as well an inflation hedge.
  • Gas asset transactions generally restricted to de-risked and economically viable development assuming $3.00/gas with proximity to growing Gulf Coast LNG and Petrochemical demand playing a factor.

In addition to the themes and drivers, Drillinginfo also provided data showing other top takeaways from Q3 and a basic value for all shale plays. Check out the full data set here