Double-digit M&A growth to continue on “active” oil and gas industry activity, Barclays reports

Josyana Joshua, Bloomberg June 02, 2024

(Bloomberg) – Double-digit growth in mergers and acquisitions should persist during the next year “as conditions and optimism have improved and a very quiet 2023 left much pent-up deal activity,” according to Barclays Plc.

Source: Marathon Oil

M&A volume has risen 17% so far this year, and the investment bank’s model projects 15% to 20% growth over the next 12 months to $1.8 trillion, credit strategists led by Dominique Toublan wrote in a note Friday. Activity in 2023 was the slowest in a decade, they said.

“The recent deceleration in inflation, coinciding with stable growth outlooks in the US, has driven positive animal spirits,” the strategists wrote while also pointing to recent gains in manufacturing activity. Investment-grade credit spreads are at their tightest since 2021 and equities remain near record highs, signaling investor optimism.

The oil and gas and basic industry sectors are expected by Barclays to be the most active for M&A during the next year. Midstream firms like pipelines “are set up well to continue to consolidate given low leverage, strong balance sheets and more modest growth in US production — so long as oil prices do not shift dramatically.”

This week alone, Energy Transfer LP agreed to buy WTG Midstream in a $3.25 billion deal while ConocoPhillips announced a $17 billion deal for fellow producer Marathon Oil Corp.

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